We will try to avoid personal judgment and prejudice and explain clearly what the facts are about payday loans. Let’s start with the most controversial topic when it comes to payday loans: the interest rate. In order not to bore the reader with different definitions and comparisons of interest rates, we agree that when we talk about interest rates, we mean the APR, which includes the interest rate and most other fees and borrowing costs.
The interest rate
As promised, we will avoid judgment and still point out facts. We will also avoid numbers as there are too many differences between lenders. The truth is that the interest rate on payday loans is high. Higher than home loans, home equity loans and generally higher than all other personal loans, either secured or unsecured.
The interest rate charged on payday loans is (with some exceptions) always higher than the interest rate charged on unpaid credit card balances. In summary, with some (but very few) exceptions, payday loans are probably the most expensive financial product in terms of interest rate.
time for approval
Payday loans are approved FAST. They are also probably the credit product with the shortest approval period on the market. Most payday loans are approved within 24 business hours. There is no point of comparison due to the characteristics of the loan, but they are still the type of loan with the fastest approval process.
The approval rate of payday loans is high. It is higher than all other types of loans and credit card products. Can People With Bad Credit Be Eligible For Payday Loans? Provided they meet credit requirements that have nothing to do with creditworthiness or history, the answer is YES. People with bad credit, no credit, or even bankruptcy can be approved for a payday loan just like someone with perfect credit.
The commonly heard statement that payday loans have “no requirements” is FALSE. There are no “no requirements” in the financial sector. Payday loans have no credit requirements, but still there are requirements that you must meet in order to be approved. Payday loans require proof of steady employment (usually two years with the same employer) and possession of a bank account. No bank account and no job or other source of income means you will be rejected.
Paperwork or no paperwork?
This is a tricky one, online lenders claim that they offer no paperwork or almost no paperwork loans. If what they mean by this is that there are actually no paper forms to be filled out, then their claim can be taken as TRUE. However, you will need to fill out online forms, and if you are going to a lender that doesn’t accept online applications, you will still need to fill out and sign paper forms.
We hope that all of this information will help you form an independent opinion about payday loans. We’re not going to tell you if they’re a good financial product or not, or if they can solve or worsen financial problems. We will leave these questions for you.