If you find yourself in need of some quick money, an urgent loan is something you could consider. Urgent loans are also known as same day loans or payday loans.
These can be accessed very quickly. However, they are not designed to solve long term financial difficulties. This is because they come with high interest rates which make paying them back quite difficult.
Read on for more information on urgent loans and who they can benefit from!
What Is An Urgent Loan?
Payday loans are where you borrow short term where a lender will offer you high interest credit that is based on the amount of income that you get.
The idea behind these loans is that they will pay you a portion of the paycheck that you are expecting to get in advance. This is why these loans are also known as cash advance loans.
Using Urgent Loans
Payday loans charge very high interest rates. They also don’t require any collateral to protect them. Loans without collateral are an unsecured personal loan.
It is a very risky thing to take out as these loans do not have the interest of the borrower in mind.
They don’t consider the ability of the borrower to repay these loans and they also have lots of hidden fees designed to catch them out.
This is why urgent loans are considered to be a large cause of debt. If you are considering taking out an urgent loan you should also consider some of the other loan alternatives.
How Do Urgent Loans Work?
Most urgent loans require you to prove your income. In most cases, this involves showing your paychecks.
After you have proven this, the lender will lend you a portion of the money that you will be paid in your paycheck.
These loans require you to pay back this money within a very short time. You will usually have around 30 days to pay these loans back.
When lenders offer you an urgent loan they are taking a big risk. This is because they won’t check your ability to pay back the loan through your credit score and other things like this.
In order to protect themselves, they often charge very high fees and interest rates. You will be charged a lot if you miss your repayments.
This is very dangerous for borrowers and it means that you are likely to borrow a lot more money in order to cover the costs of the loan in the first place.
How Can You Get An Urgent Loan?
Lots of payday loan providers are very small companies who have sites for you to go to in order to apply for the loan. Certain urgent loan companies are available online.
If you are looking to take out an urgent loan, you will need to provide evidence of your income in order for them to determine how much money you will be able to borrow.
In most cases you won’t need to provide any collateral or undergo a credit check to take this loan out.
Are Urgent Loans Legal?
There have been many attempts to regulate these urgent loans, specifically under Obama.
These urgent loans are very dangerous loans for people to take out and they do not have people’s best interests at heart so it is very important for there to be some regulations taking place.
Trump reversed these changes during his time in office, making it easier for the lenders to make lots of money off these loans. Biden has since made the changes again.
Are Urgent Loans Fixed Or Variable?
In most cases, these loans are to be paid back in one go. They are designed so that you pay the loan back when you receive your paycheck.
For this reason, the payday loan interest rate is fixed. If you miss a payment then you will be charged a lot more money.
Am I Eligible?
In most cases there are certain rules for taking out an urgent payday loan. These include:
- You must be 18 years or older to take out one of these loans
- You must have proof of a regular income and be able to support the repayment of this loan
Secured Or Unsecured
In most cases payday loans are unsecured. This means that you will not be required to give the lender any collateral in order to take the loan out.
This means that you don’t have to declare your house or anything else you own in order to take out the loan.
Instead of this, you will be asked to pay a certain amount each month and you will be charged if you fail to make these payments.
The lender may ask you to pay this amount by check in some cases.
When Should You Get An Urgent Loan?
Urgent loans are used to pay for things like living costs and bills. They are used if there is absolutely no other alternative and you should always make sure you have a plan for paying this back.
How Long Do Payday Loans Stay In The System?
The records for urgent loans will be kept by the credit bureaus for between 6 and 10 years. In most cases, this will affect your ability to take out loans in the future, especially if you are late on any payments.
If you successfully repay your payday loan on time then the credit score will not be affected as you have shown that you can repay this debt.
However, if you do struggle to make these repayments then you are likely to see your credit score be affected.
Are Urgent Loan Debts Ever Written Off?
It is very rare for any of this debt to be written off. There is a lot of money to be made on payday loans and the companies that are offering them out are only in it for profit.
They will not be lenient with the payments as they will want to get their money back and they will do so by charging a lot of interest on late payments.
Do You Need A Bank Account To Take Out An Urgent Loan?
You don’t need a bank account to take out an urgent loan but it will make the interest rates lower. If you don’t have a bank account then you will be charged very high interest rates.
In most cases, you will be asked for your bank account details when you are taking out a loan.
It is always a good idea to avoid taking out these loans because they are very difficult to repay.
This can lead you to a debt trap which can be very difficult to navigate and escape from. These loans should be taken out only if you are sure that you can pay it back.
Urgent loans are designed to ensure that any short term expenses are able to be covered without you needing to have collateral.
These loans have very high interest rates and they can be considered predatory, preying on those who don’t have any other choice.
Ensure that you can pay these loans back if you do take them out!