Are you one of the 80 percent of American workers living paycheck to paycheck?
If yes, you’ve probably experienced days when you were short on cash and payday was a few days away. Maybe you asked a friend or relative to lend you some money or withdrew a cash advance from your credit card account.
There is also another option that’s becoming increasingly popular: online payday loans with no credit check.
If you’ve never taken out this loan, you’re probably wondering whether it’s legit.
Well, wonder no more. In this article, we’re evaluating whether it’s possible to secure an online payday loan with bad or no credit.
What Are Payday Loans?
A payday loan is a credit facility that enables an individual to borrow money against their paycheck or salary. Most payday loans are settled on the next paycheck, but it’s possible to get a repayment period of up to 12 months.
These loans are popular among Americans, with about 12 million turning to payday lenders every year.
So, take out a loan and pay it on your next payday. Looks pretty straightforward, right?
While payday loans can help you get out of a financial fix as you wait for your salary, they carry very high interest rates. Reportedly, getting a $375 payday loan repayable over a year will cost you about $520 in fees.
With such expensive interest rates, why do people go for them?
The Big Issue of Bad or No Credit
Is there anything worse than having bad or no credit in today’s harsh economic times?
Banks do a credit check as a standard practice, meaning applicants with a bad or no credit get turned down. And if you’re lucky enough to get approved, you’ll pay a premium in terms of higher interest rates.
But you see, having a bad credit record or none at all doesn’t necessarily mean you’re unable to service a loan that’s within your income. In fact, it’s not always financial irresponsibility that causes people to have lower credit scores.
During the Financial Crisis of 2008, for instance, there were over 3.1 million foreclosure filings. Given that a foreclosed mortgage account stays on a credit report for seven years, the affected homeowners saw their credit scores take a hit as a result of an economic situation that was out of their control.
Seeing that banks were locking out individuals who were only high risk on paper from getting loans, cash advance companies started offering bad credit and no credit check loans.
The Rise of Online Payday Loans with No Credit Check
Back in the day when the internet wasn’t a thing, banks, cash advance companies, and other lending institutions operated offline.
If you wanted to take out a payday loan, you had to physically visit a cash advance shop, fill out the application forms, present your pay stubs and wait for the lender to verify the information and make a decision. This took at least a couple of days.
Then came the internet and lenders took their services online.
Promising instant approval and same-day loan disbursal, online payday lenders struck gold. Today, you can apply for a loan from the comfort of your home and office and get your money in a matter of hours.
Internet Fraud Has Ruined the Party
While the internet has revolutionized how we apply for credit and transact our money, it’s fueling financial fraud.
As a result, the world of online payday loans is littered with scams.
For example, some scammers set up payday websites promising large amounts, quick approvals, crazy low rates, and no credit checks. All you have to do? Fill out the application form and send over $100 or whatever amount as processing fees.
Because most of the people seeking payday loans are typically in desperate situations, it’s easy to fall, victim. You’ll never hear back after sending the processing fees.
There are also property-registered online payday lenders who give clean loans but engage in shady practices, like selling customer information to third parties. Once these parties have your personal information, including name, phone number, email, and social security number, they can use it to lure you into other scams.
You could be sitting at work minding your business, suddenly an email shows up. You have been approved for a loan. You think it’s one of your many applications that has finally gone through. Excited, you swallow the bait and before you know it, you’ve been scammed.
How to Protect Yourself When Shopping for Online Payday Loans
Even though federal and state governments are taking measures to prevent online financial fraud, a lot rides on your personal know-how and assertiveness.
When looking for online payday loans, start by getting recommendations from close friends and relatives. If your offline search doesn’t bear any fruit, use search engines. However, be sure to look up online reviews and ratings of every lender on your radar before making an application.
Don’t shy away from calling the lender and asking for registration and licensing details. Any authentic company should readily provide this information and even refer you to some of their past clients.
In short, don’t approach any online payday lender until you’re 100 percent sure of their legitimacy and reputation.
Online Payday Loans with No Credit Check Are Legit
When you have bad or no credit, your borrowing options are limited. Thanks to online payday loans with no credit, however, you have the opportunity to access funds and steady your financial ship.
The bad news is online financial scams are very prevalent. If you’re not careful, you can easily get scammed and fall into an even bigger financial problem. The key is knowing how to find a legitimate, reputable lender, and we’ve told you how to do just that.
Good luck and keep tabs on our blog for more finance hacks and tips.