If you need money now but have a challenging credit history you’re probably wondering if those online payday loans for bad credit are worth it.
The answer to that question depends on your willingness to pay more money for your loan. If a lender offers loans to individuals with bad credit or even waves the standard credit check, you can be confident their risk has been baked into the loan. In other words, they make up for that risk by charging extremely high interest rates or “finance fees.”
Payday loans with no credit check are even riskier for consumers. These lenders are basically saying that they don’t care about the potential risk. Since the typical lender is a business looking to make a profit, the seeming lack of interest in your credit history should be an immediate red flag that the lender may not be operating with your best interest in mind.
Related: How to Get an Emergency Loan with No Job
Ways That Payday Loans Can Be Harmful
- Payday loans are expensive. Interest rates for payday loans are often extremely high. The cost of the loan (the finance charge) typically ranges from $10–$30 for every $100 borrowed, so a $500 loan would include an extra $50–$150. If you have difficulty repaying the loan when it is due, these fees can increase.
- Payday loans can damage your credit. Lenders usually require a check upfront to cover the cost of the loan, which they then cash when the loan is due. If you don’t pay and they cash your check and it doesn’t clear, they likely will report that to the credit bureaus.
- Payday lenders can require you to give them your bank information. Instead of requiring a check for the loan amount upfront, the lender may require your bank account information so they can simply withdraw the money when due.
- Payday loans can lead to debt collection issues. Many payday lenders are debt collection-minded. They might also sell your debt to an actual debt collector. If you are unable to pay the loan on time, you may be harassed with debt collection calls.
What’s really sad is the payday loan industry soared during the pandemic charging hard working consumers up to 589% interest, which was even more devastating during one of our hardest economic seasons.
Providers of high-cost loans say they offer credit to communities that are under-served by traditional banks, and that high-interest rates are necessary because those borrowers are more likely to default. But according to consumer advocates, the loans often cause families to fall into debt traps built on exorbitant fees and endless renewals.
Bloomberg
If you still feel as though payday loans are your best option, here are some non-predatory payday lenders.
Related: The Best Personal Loans for Bad Credit
The Best Payday Loans for Bad Credit
1) CashUSA.com
- Loans from $500 to $10,000
- Receive a loan decision in minutes
- Get funds directly to your bank account
- Use the loan for any purpose
CashUSA helps borrowers with bad credit arrange short-term personal loans that require no minimum credit score. In the prequalification step, CashUSA requires that you be a U.S. citizen or permanent resident, age 18 or older, and have an income of at least $1,000 per month before taxes. You also must provide a valid phone number, email address, and checking account in your name.
2) BillsHappen
- Quick loans up to $5,000
- Submit one form, get multiple options
- All credit ratings welcome
- Requires bank account and SSN
BillsHappen can prequalify you for a short-term installment loan that will give you more time to repay than will a payday loan, and at a lower cost. The company can quickly find you a direct lender that can deposit approved loan proceeds into your bank account as soon as the next business day
3) CashAdvance.com
- Short-term loan of $100 to $1,000
- Large network of lenders
- Loan decision as fast as a few minutes
- Funding as soon as the next business day, if approved
CashAdvance.com has been providing loan services since 1997. It is an online payday loan facilitator that offers terms tied to your next paycheck. You can quickly prequalify if you are a citizen of the United States, at least 18 years old, earning $1,000 per month or more before taxes, and have a checking account, email address, and phone number.
Alternatives to Payday Loans
The lenders below all have a few things in common — they offer “traditional” personal loans rather than loans with higher interest rates such as payday loans. Additionally, they all provide potentially fast funding and a range of options for how much you can borrow when you need a small loan.
1) Earnin
Earnin is an app that, similar to a payday loan, lets you use your next paycheck as collateral to get money the same day. Earnin works by automatically deducting the amount you borrow from your checking account on your next payday.
Earnin says you won’t pay interest or fees when you borrow money using the Earnin app. Instead, the company does encourage users to “tip” an amount they feel is appropriate for using the service. But tips aren’t required to use the app.
2) Stilt
Stilt says it offers loans to “immigrants, visa holders and underserved people” who live in the U.S. Even if you don’t have any credit history or a Social Security number, you might still be considered for a Stilt personal loan, depending on other financial factors.
Stilt loan amounts range from $1,000 to $35,000, with maximum loan terms of up to 36 months. There are no prepayment penalties, so you can pay off your loan early without an additional fee and save on interest.
3) Credit Union Loan
Credit unions typically offer affordable, small, short-term loans to members. Unlike payday loans, these loans give you a real chance to repay with longer payback periods, lower interest rates and installment payments.
Oftentimes those who need fast payday loans the most feel as if those loans are their only option and end up in a worse position in the end.
Before deciding to get a payday loan, try to exhaust all other options first. And if you do go with that option, only borrow what you absolute need because the fees are based on how much you borrow.
