How to get a payday loan online?

By: Melanie Ferguson

The fintech sector has grown leaps and paces in the last decade. The number of products and services available in the fintech sector is increasing with each passing year. As time passes, the alternatives to the conventional banking sector are growing.
The alternative lending sector in the fintech marketplace is snowballed despite the criticism. The growth of the fintech sector has been gradual and marks a process of trial and error. The alternative lending industry, in particular, started with peer-to-peer lending platforms. Some of the earliest P2P platforms also ran into trouble due to liquidity issues, but over time regulatory authorities intervened and encouraged the alternative lending industry to build up safety nets.
These safety nets allowed fintech startups in the alternative lending marketplace to evolve into more robust lending organizations. The creation of these safety nets, which include basic KYC routines, checking the creditworthiness, building up reserves to secure the investors, allowed the startups in the alternative lending marketplace to build up much-needed trust with the investors backing the industry. As a result, these confidence-building measures let alternative lending sectors such as online payday loans grow.

What is a Payday loan?

A payday loan is a type of alternative loan that can help you in times of dire need. It is a quick way to get a small loan from a lender, not a bank. The payday loan can carry a high-interest rate and strict payback terms, but they can prove to be handy in times of need.

Who needs a payday loan?

Online payday loans are not usually the first choice for those who take them out. If you are short for cash and your creditworthiness is good, then the first choice can be your credit card or bank account to draw upon your savings. If this is not an option, then you can go for a personal loan from your bank. Once again, if your creditworthiness is good, your bank should not have too much trouble approving a personal loan.
If, however, your creditworthiness is not very good and the banks shut their doors to you, then you may be left with very few options. In most cases, your only options will be online payday loans or P2P loans, unless, of course, your friends and family members chip in for help. If not, then online payday loans and P2P loans may be your only two options.
Many people may even get turned down by P2P lending platforms if their creditworthiness is not up to the mark. P2P platforms carry out credit checks and make sure that the borrower can repay the loan. In such a situation, you may only be left with the option of going for a payday loan.

Things to consider before getting an online payday loan

If you are thinking about getting an online payday loan, you should consider every aspect of it before actually getting one. If you consider a payday loan, then it is highly likely that all other doors have been closed. This means that your creditworthiness is not good, and if you are strapped for cash, you need to think everything through before getting a payday loan.

Access to funds

It is effortless to get a payday loan. You have to go to the site and apply for one, and usually, you get the funds within 24 hours. Getting an online payday loan is easy but what comes afterward is what needs to be considered.
Think about it. Online payday lenders know that they are the last option that the borrower has got, so they know that they can exploit the borrower for their financial needs. This means that when you go for an online payday loan, the lender is the one who calls the shots.

Cost of online payday loans

This is why online payday loans carry very high rates of interest. The annual percentage rate (APR) on an online payday loan can be anywhere between 100% to 3000%. The interest rate can be anywhere between 15% to 30%, which is exceptionally high if you consider the benchmark interest rates.
This is exploitative, yes, but such is the nature of this market. Online payday lenders know that your creditworthiness is not good enough for lenders higher in the pecking order. They use this vulnerability to get the rate that they want.
The first thing to remember when going for an online payday loan is that you will have to pay a very high cost for it. Keep in mind that the whole amount is going to be deducted from your next paycheck.

Terms of repayment

The next thing to remember is the fact that online payday loans cannot be repaid in installments. This is the reason they are called online payday loans. Online payday loans usually carry two-week terms. This means that if you take out your online payday loan on the 3rd of the month, you will have to pay it back in a fortnight by the 17th of that month. If you did not have enough cash on the 3rd, which is the beginning of the month, and usually when people get their paychecks, then it is doubtful that you will have the required cash by the due date.
Upon failure to pay the loan back in two weeks, the online payday lenders allow the borrowers to rollover their loan for a further period, but this once again comes at a very high cost. So, keep in mind that if you cannot pay for the online payday loan within the stipulated two-week period, it will only exacerbate your financial woes further.
Now online payday lenders do not operate as banks. They do not want you to pay back on time. Instead, it serves their purpose if you pay late because this way, they can charge late penalties and additional costs. This is why they will try to facilitate you if you are not able to pay on time. Therefore, it is highly suggested to make sure that you pay back on time to avoid incurring extra costs, which can increase the cost of your loan two or three times. This is why, if you have to take out an online payday loan, then make sure that you have worked out your exit strategy beforehand.
Let us look at the cost of an average online payday loan. Usually, payday loans can be for amounts starting from $50 and going up to $1000. The average online payday loan is between $300 and $400. So let us assume that Jack takes out an online payday loan of $350 at a 20% interest rate. This means that the finance cost on loan is going to be $70. Thus, the total cost of the loan is going to be $350+$70= $420.
If Jack pays this loan on time, the loan will cost approximately $420 if the lender has not charged any administrative cost. However, Jack fails to pay the loan back on time and asks for a rollover of further two weeks. The payday lender will be more than happy to do this by adding extra interest charges on the previously owned total.
Jack previously owed $420, so now the finance charge will be calculated on $420. At 20%, this comes to around $84 and adds up to make the total owed amount $504, without late payment charges. So, Jack took $350 from the online payday lender and ended up owing $504.

How are online payday loans repaid?

Repaying an online payday loan is quite simple. When signing up for the loan, the lender will require you to submit your bank details or a pay stub. To make sure that you can at least payback. Policies differ with each lender, but most lenders, if not all, ask for a post-dated check at the time of signing up. Those who do not ask for a post-dated check ask for electronic access to the bank account to automatically withdraw the money on the due date. This can be done through a direct deposit request to the bank.
This means that the total amount that the borrower owes to the online payday lender will be deducted directly from the next paycheck.

Where can I get an online payday loan?

There are many online payday lenders. As stated above, this part of the fintech industry has seen much growth in the last ten years. The alternative lending industry is riding the wave of the fintech revolution. If anything, fintech has made getting payday loans faster, convenient, and more transparent for the borrowers and lenders.
Whatever has been written above may make online payday loans sound like a last resort which is what online payday loans exactly are. So if you are reading this article this far, the chances are that you must now be thinking, where on earth can you get an online payday loan that does not end up ripping you financially?
There is no need to worry. As we mentioned above, you need to do your homework before getting into a payday loan. Work out your exit strategy, make sure that you have reached the cash to pay the loan back in time. If you do your homework well, you can repay the loan without incurring a very high cost.
There are plenty of lenders online, and many are pretty respected names in the market. So let us look at three of the most trusted online payday lenders now.

Check into Cash

Check into cash is a very reputed name in the payday loan sector. They have been operational since 1993 and have transitioned with time to offer their services online as well.

  • A+ rating on Better Business Bureau (BBB)
  • Trust pilot rating of 4.5
  • Present online in 22 states
  • Physical states in over 800 locations
  • Lending limit: Up to $1000
  • New customers capped at $750.
  • APR at 399%, which is the industry average
  • Fast application process with immediate funding.

Opportun

Opportun was set up in 2005 as an alternative lender and had almost 15 years of experience in the industry. They claim to be ethical and responsible lenders, and the experience of borrowers shows that they make sure that they only lend to borrowers who can pay the loan off, which is always a good sign.

  • A+ rating on BBB
  • No credit history required
  • Lending limit: $50-$10000 (not advised to go for loans above $500)
  • APR at 35.99% or lower
  • Quick access to funds

CashNetUSA

CashNetUSA is one of the highest-ranked online payday lenders in the American market right now. It was set up in 2004 and has since then built up a reputation of catering for borrowers who have got shallow credit scores.

  • B- rating on BBB
  • Trust Pilot rating of 4.6
  • Available in 30 states
  • Lending limits: $300-$1000
  • Upper limit depends on the state
  • APR at 399%, which is the industry average
  • Access to funds within 24 hours
  • Savings programs for clients looking to improve their credit ratings.

To close this discussion off, remember to check out every available option before turning to payday loans. They may appear as an easy way to get quick cash, but they come with many strings attached, which are better avoided if possible. If you have no other option, do your homework and make sure that you do not end up going for a rollover.

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