It seems that financial emergencies are the norm these days. We have been bouncing from one financial crisis to another for the last twelve years. When you have bad credit and need a loan quickly, a two-day wait is generally accepted, but loan denial is not.
Fortunately, the Internet has given us the full ability to fund our bank accounts within hours of submitting the application. You just have to comply with the conditions and requirements proposed by the lenders. It’s also a no-brainer that the cost of instant approval is higher than if you can wait a day or two for an approval.
The reason an online lender can grant you instant money is that they are not running any credit checks on you. This means that they have to use other means to determine the risk of default on the loan and their ability to make monthly payments.
What does instant approval mean?
Instant approval does not mean that there is no approval process. To believe that anyone who doesn’t know you personally will give you money without doing some kind of verification is insane. However, instant approval seems to indicate that sanity is overrated.
The approval process used by online lenders is very simplified as there is no credit check. The credit check takes several hours and that is one of the things that slows down traditional lenders in the approval process.
Online loan applications use computer software to examine loan approval criteria. The software can quickly calculate your debt-to-income ratio and determine if the loan is affordable for you. The software can then send the email and initiate the transfer of the money to your account.
Instant loans aren’t perfect
With all the good news surrounding instant loan approval, there is some bad news. Basically, having bad credit makes the loan more expensive over time.
Expect to pay an additional 1 percent interest on your loan by going through an online lender with instant approval. They will also have lower maximum loan amounts, some of which may be as low as $ 10,000.
What about payday loans?
It is impossible to turn on the radio or television today without seeing an advertisement for personal loans. Payday loans have become a common loan option for many people. It’s almost impossible to get turned down for a payday loan as long as you have enough income.
The premise behind payday loans is that you are borrowing money before your next pay check. Original payday loans would take a full refund out of your bank account on the day of your next paycheck. This made the loans risk free for the lender.
Originally, payday loans were limited to amounts ranging from $ 100 to $ 1,500. They would charge 30 percent interest. Today, payday lenders will lend much larger amounts at higher interest rates. If you can’t pay off the loan quickly, payday loans are very bad financial options.
Payday loans can be useful if you can pay them off in a month and use the money to eliminate other debt. This will increase your credit rating and allow you to obtain better personal loans to consolidate your existing debt.
Always do your due diligence when looking for an instant loan. There are scams on the Internet and they want to get your personal information. Call their customer service number and make sure it’s an answering company. Make sure they don’t just include a PO box for their corporate address. Protect yourself so that when you are in a financial crisis you don’t get into an identity theft crisis as well.