What You Need To Know About Payday Loans Without Credit Checks
Payday loans are also processed within 24 hours, with some offering cash in less than an hour, as opposed to the days or even weeks of slow credit checks when it comes to bank loans. This allows people to get a fast cash loan and let them settle outstanding bills without having to deal with the inconvenience of disconnection or further money problems that stem from penalty fees. Some payday lenders even operate online, providing further convenience for people who prefer to save time and effort applying for payday loans without credit checks.
Given all these advantages of payday loans without credit checks, it is prudent for people to understand the nature of these instant payday loans as well as learn some tips to get the most out of them. Some payday lenders may use abusive and even illegal policies against their clients, who typically display poor financial literacy with their blemished credit history. Only by knowing their rights as borrowers can people get the best deals from lenders, or avoid unscrupulous lenders altogether when acquiring their fast cash loan.
Tips to protect yourself from payday lenders
If you want to avail of payday loans without credit checks, you should only borrow the maximum amount that you can pay back in full on your next payday. Borrowers who fail to meet their repayment schedule may opt to rollover the amount to the following payday, but they will have to face stiff penalty fees as well as compounded interest. This could easily lead to a cycle of debt, which may trap a borrower for years, sapping out most of their income just in order to pay their debt. Another trap to watch out for is borrowing from another payday lender to pay off the first one. The interest that can accumulate from this back-and-forth transaction can increase for months or even years, preventing the borrower from ever being free from debt. Only when a borrower can increase his income by finding an additional job can he afford to borrow more than his stated income.
Know the laws surrounding payday lenders
Many states require that payday lenders acquire licenses from their Department of Corporations, which they have to display prominently at their branch location along with their fee schedule. The Department’s website or toll-free number allow borrowers to confirm a lender’s license status or file a complaint against abusive practices. Another common state law covering payday loans without credit checks is that lenders are may only make one loan, which cannot exceed a maximum amount, which is usually $300. A lender can also only charge a maximum fee of 15%, or up to $45.
A lender cannot also issue a payday loan without credit checks to cover an existing loan, as well as issue another loan while an existing loan is outstanding, even if the amount is within the maximum allowable value. Another common law is that if the check bounces, the lender may only charge one bounced check fee, unlike a bank, which may charge additional fees for insufficient funds. These penalty fees cannot be charged, however, if the borrower requests to extend the period of the loan or payment plan. On the other hand, the lender is not legally bound to grant such a request.
Another common law for payday loans without credit checks is that the contract for the loan must in a language primarily used in negotiation with the lender. A lender cannot also threaten prosecution in a criminal court if a borrower has insufficient funds. It is wise for borrowers to review payday lender laws in their own states before using their services.
Know the alternatives to payday loans
One alternative to payday loans without credit checks is borrowing money from friends and loved ones. This form of personal loan usually comes without credit checks as well, although there is a maximum amount that can be borrowed based on the savings of the lender. Another advantage to this form of borrowing is that the lender will usually charge no interest to the amount being borrowed. The downside is a possible social stigma that can alienate families and friends based on the issue of money.
Pawnshops are another way to obtain funds without financial paperwork, which is similar to payday loans without credit checks. Pawnshops require that people exchange their valuables for cash, avoiding for the need of a credit check. A client may then opt to reclaim their valuables at a later time by repaying their principal with interest, or abandon their item altogether and let the proprietor recoup his loss by auctioning off unclaimed items.
Finally, a strict budget which answers all a household’s needs within their available income should be planned and implemented to prevent a family from sliding down any more into debt. This budget should also include debt payment schedules and even an emergency fund, if possible.