Payday loans may seem like a quick and easy solution for unexpected expenses though they do have their shortcomings. Understanding the benefits and disadvantages is important in knowing if they are the right type of loan for you.
Unexpected financial issues happen and if you don’t have savings in place or access to credit such as a redraw facility or credit card, options for covering the expense may be limited. Depending on your financial history obtaining a quick personal loan from a bank or credit union may be difficult. These are the types of situation where micro loans such as payday loans can be of assistance. They are however an expensive form of borrowing and can be a big hindrance to your financial situation if you are unable to make your repayments.
With so many payday loan providers out there how do you choose?
With the explosion of payday lender in the Australian market over the last couple of years, it can be very challenging on identifying which are more reputable than the other. Keep a few of these thoughts in mind:
– They provide transparency across all costs
– The terms of the loan are clearly outlined and not hidden within the website
– Check to see if they are partnered with other reputable companies or associations
– They have contact details or a customer service line
– Search review sites to see what others have said about them
The above are a few quick tips on how to narrow down your choice.
Be wary of advertisements that sound too good to be true. With heavy competition within this industry, lenders will try anything to get business through the door.
Frequently asked questions on payday loans
How can payday lenders provide loans without a credit check?
Some advertising may be a bit misleading as the initial pre-approval process may not include a credit check. In other situations, they may put more weight in the approval processes based off of your serviceability, looking at your current salary versus expenses. Other scenarios may involve a direct debit set up so they will receive the whole amount or minimum repayment amount when you get paid. Payday providers are very creative in finding ways to mitigate their risk while still approving loans.
How to get a no credit check payday loan?
Follow the tips provided above. If a website is unclear on whether they run a credit check or not, call them for confirmation. It may also be beneficial to ask them to email you their response if they state that they don’t run a credit check. If you have concerns about not getting approved do to a bad credit rating, check with the lender anyways, many accept borrowers with poor credit.
Types of unsecure loans that are payday loans and have no credit check
As mentioned, with so much completion in the payday loan space lenders promote these loans using a range of labels. Some of the more common titles include:
– Payday loans
– Small loans
– Cash loans
– Micro loans
– Same day loans
– Bad credit loans
– Unemployed loans
– Welfare loans
– No credit check loans
– Flexible loans
– Mobile loans
– Personal loans
Can I trust a no credit check payday loan?
As with any type of loan, if you understand the fees and terms, you know what you’re getting into. As mentioned in the section on how to choose a payday loan provider. If you do your due diligence, you’ll minimise or eliminate any surprises. Don’t engage in any type of contract or arrangement that you don’t understand.
What are the pros and cons of payday loans?
The main benefit is obtaining the cash you need for whatever circumstances you need it for and negatives are the costs and potential fees and black mark on your file should you not meet your repayment requirements. Other pros and cons include:
– Quick and easier approval process (than banks)
– No credit checks in certain circumstances
– Bad credit can be ok
– Loan amounts can range between $100 to $3000, in some instances a bit higher
– Some consider an online application a positive
– High interest rates
– High fees
– Short repayment terms
– Approval to those who can’t afford the loan
– Industry regulation may be weak
How to apply for a payday loan with no credit check?
If you have done your due diligence and feel comfortable with your choice, simple apply online or via your mobile. Make sure you meet all the general criteria such as: Being an Aus resident or citizen, be above the age of 18, are employed and have an active bank account. You will need to prove all the before mentioned. Prior to taking on any loan, make sure you can afford it and you won’t be putting yourself into a uncontrollable debt situation.
If you are taking on a loan to pay utility bills, purchase groceries or any other everyday living expense; this may be a sign of bigger issues. Quick cash loans will only provide a simple band aid solution to your financial issues. Contacting a free financial counsellor may be a good idea in finding a more permanent solution to money problems.
Alternative financial services for those needing a loan or help with money
If you have been considering a payday loan because you need assistance with needs that are specific to running the household, there are many other options available to you. There are numerous services provided by the government in addition to non-profits and credit unions. They have actually created loans that are specifically designed to help low income earners and those with poor credit – Learn more about the different loan options here.