Getting a loan with bad credit is frustrating, nerve wrecking, and even scary. Sometimes, it feels downright impossible to borrow money when you have less than perfect credit. Unfortunately, banks and credit providers usually turn down borrowers with bad credit. Luckily, there is no reason to despair. There is a place where you can turn — Speedy Cash.
If you’ve never applied for a payday loan, you may be wondering how they work. Here’s a look at the basics.
How Payday Loans Work
Payday loans, also known as cash advances, are small short-term loans. For example, someone may take out a $300 loan for 14 days. In many cases, borrowers arrange to repay payday loans on the date of their next paycheque.
The process is fairly straightforward. You apply for the loan, and if your application is approved, you sign a contract which will outline the borrowed amount and any fees the loan will cost you, and the lender/company gives you the funds. In most cases, you set up preauthorized payment to repay the loan from your chequing or savings accounting on the due date.
Applying for a Payday Loan
You can apply for a payday loan in person at a local payday lender. However, you may also apply for payday loans online. Applying online gives you access to more lenders. That allows you to easily compare multiple lenders to see where you can get the biggest loan and the best terms.
To apply for payday loans with bad credit, you typically need proof of your income. Many companies accept a paycheque stub, but some companies prefer a bank statement that shows a regular history of deposits. You may also need to show a copy of your ID or provide your social insurance number. Finally, to set up repayment, you need your bank account numbers.
In most cases, that’s it and you don’t typically need any other documents. Payday Lenders usually base their approval on your ability to repay the loan more than your credit history. For example, to apply for a loan with 310Loan.com, there is NO credit check.
Tips for Self-Employed People
If you are self-employed, you don’t have paycheque stubs. Unfortunately, that means some payday lenders may not be willing to work with you. Don’t worry — the tide is turning. More and more payday lenders are willing to work with self-employed people.
Because each self-employed business is unique, lenders may have unique requirements for verifying income. For example, some may want a copy of your business revenue and expenses for the last month, or they may want to see your payment or chequing account, that shows the lender/company a history of deposits.
Interest Rates on Payday Loans
When you borrow money from a bank, the bank charges interest in exchange for the loan. The interest is essentially the cost of the loan. Because payday loans are short-term loans, it doesn’t make sense to apply an interest rate. Instead, most payday lenders charge a fee.
For example, if you take out a $300 payday loan and the fee is $54, you repay a total of $354. This is similar to how you pay interest on a mortgage or a car loan where by the end of the loan, you actually repay more than you borrowed.
Many provinces have established regulations for Payday Loans. For more in depth information, visit the Canadian Consumer Finance Association(CCFA), which works with the federal and provincial governments to achieve regulatory framework that protects consumers.
Speedy Cash Canada is a member of the Canadian Consumer Finance Association (CCFA) and complies with required province regulations.
Benefits of Payday Loans
The biggest benefit of payday loans is the fast application and approval time. Compared to, if you apply for a credit card for people with bad credit, it may take weeks to get the card mailed to you if approved. Banks may also take weeks to approve loans.
If you apply for a payday loan in person at a payday loan or cash advance store, you can often get the cash handed to you on the spot. When considering the process of visiting a store location and waiting in line, an online loan may be a quicker, more convenient option. Many online payday lenders deposit the funds into your bank account by the next business day. If you choose to borrow with 310Loan.com you can have your funds in as little as 30 minutes! This speed makes payday loans ideal for financial emergencies. Payday loans are perfect if your car breaks down, you need to pay a utility bill, or a medical bill for example.
Since some payday lenders don’t take your credit into account, like Speedy Cash, this can be very liberating if you have had credit issues in the past. You don’t have to worry about being turned away due to poor credit issues.
Other Loans for People with Bad Credit
Payday loans aren’t the only type of loan for people with bad credit. Some credit card companies focus on consumers with average to poor credit scores. Many credit unions or caisse populaires advertise Fast Forward Small Loans to people with bad credit; however, following a required credit check as part of the loan approval process, customers are often denied or offered other banking services such as lines of credit, overdrafts or title loans using a vehicle as collateral. Credit unions will also generally require a customer to open an account, which typically will incur monthly account-keeping fees.
Another option includes looking into other lenders who primarily work with small business owners. There are usually local lenders such as these in your area, if not, there are many options online to explore. Rather than granting loans based on credit scores, these lenders look at business sales, and they let business owners make repayments when they have sales.
Peer-to-peer lending can also work for people with bad credit. This process is similar to setting up a crowdfunding page like Kickstarter or RocketHub. You create a profile and explain why you want to borrow money. If your profile entices one of the lenders on the site, they can choose to lend you money. Profiles may include a rating to indicate your credit score, which means it can be harder (although not impossible) for people with bad credit to have success on these sites. In addition, peer lending can be a lengthy process.
There are a variety of laws that apply to the payday loan industry, and these laws vary from province to province. This means that you may get different offers depending on where you live. For example, some provinces stipulate the maximum amount of fees the lender can charge you. When you apply for a payday loan online, the lender will structure its offer on the rules in your province or territory.
Need money fast? Worried about your bad credit? A payday loan may be the right answer. Payday loans are fast and convenient. Apply with Speedy Cash today and see how much you can qualify for.