A longer-term 3-month payday loan may be a useful tool for many consumers. This article highlights important things you need to know to understand whether a payday loan is right for your needs and budget, and whether there are any alternative cash solutions.
What You Need to Know About 3 Month Payday Loans
How can a 3 month payday loan help you in an emergency? How can you avoid a debt trap?
An emergency can never be predicted and usually comes as a surprise. You are also not sure about your ability to cope with unforeseen money problems and how to stay afloat till you get paid.
So, what is the easiest way to get some emergency cash till you receive your next paycheck?
Many people who have a financial emergency tend to take out a payday loan. You may wonder why payday loans are so popular among Americans.
What are the advantages of 3 month payday loans?
It is a common form of fast money. You can access the funds quickly – with no credit checks involved. The only requirements set by payday lenders are that you must be at least 18 years of age and have a source of verifiable income. That’s all!
These products are easy to get and come with high approval rates. There are many lenders that are willing to lend you fast cash even with bad credit.
According to CNBC, there are approximately 23,000 payday lenders available in the U.S. market. So, getting a 3 months payday loan is easy and effortless – you can get money as soon as today simply by filling out a short online application form.
When you need fast cash in an emergency, applying for a payday loan can often be the right move. Legislation regarding payday loans varies widely between different states, but the average range is $100 to $1,000. You can typically repay your 3 months payday loan with 3 monthly installments that are pre-agreed and equal.
During the application process, you should also be ready to provide your phone number, email address and a checking account in your name. If approved, the money will be deposited to your bank account within 24 hours, often instantly.
How to get a payday loan: know your options
Get a 3 months payday loan from a direct lender
Direct lending is when a person or organization gives out a payday loan directly to another person without involving anyone else. Typically, when you take out a 3 months payday loan from a direct lender, the latter will expect you to pay off the debt in 3 fixed monthly payments. It’s a kind of an installment loan.
The lender may deduct the amount automatically from your bank account on the same date every month. So, you will never forget about the due date and avoid late payment penalties.
Apply for a 3 months payday loan online
An online payday loan is the fastest way of getting cash in an emergency. Most Americans prefer using places like speedy-payday-loans.com. The service is 100% online, safe and works with any credit. You just have to complete the form via the Internet and provide basic documents like:
- Your government-issued ID;
- Your active bank account;
- A recent proof of income.
You may expect to receive your online payday loan on the same day you apply. Just make sure the online lender you work with is licensed in your state to issue payday loans online.
Get a payday loan with a bad credit score
Yes! Even if you have a low FICO score, you can still qualify for a payday loan. According to recent US loan news, the typical minimum credit score to qualify for a personal loan from a bank is 560 to 660. So, what should you do if your credit score is lower than 560 points and you need extra cash quickly?
You may apply for a payday loan because:
- Many payday lenders do not rely on a credit check at all. Instead, they rely on other factors, like your current income and existing debts.
- You may be eligible for a payday loan even if you have no job (but you are still required to have an alternative source of income).
- Some payday lenders may approve you for a loan without an active bank account in a financial emergency.
If you have submitted your request for a payday loan, the money can reach your account within several hours. That is why millions of Americans choose payday loans in emergencies. This product can become the best solution and bring instant relief in tough times, but a new problem may appear in your life regarding how to repay the loan.
Why payday loans are sometimes called “predatory lending”?
1) Payday loans generally have higher rates of interest than personal loans
The average APR of the payday loan may hit your budget. You have to repay the principal loan amount with a 300% – 400% interest rate. That’s quite expensive. Although it is possible to get rid of payday loans, most consumers prefer to consider alternative cash solutions in the first place.
2) payday loans are intended only for short periods of time
The payday lender will generally expect you to repay the loan in a 3 months installment. For some consumers, it may be challenging to repay a $1000 loan with a 400% interest rate within a short period of time, especially when you are already having financial difficulties. If you default on your loan, you risk finding yourself in a debt cycle.
What is an example of a payday loan cycle?
For example, let’s say, you take out a $1000 payday loan with a fee of $50 and an interest rate of 400%, and you give the payday lender permission to take money out of your account. On the due date, if you do not have enough money in your account, then the payday lender might send your debt to collections.
Many borrowers had difficulties repaying the debt with the sky-high 400% interest rate. They contact the payday lender again with a request to give them additional time to pay back the debt. Typically, the lender meets you halfway.
They will offer you an extension for an additional fee in some cases. It means a mutual agreement between a lender and borrower that extends the maturity date on a borrower’s loan. Many borrowers cannot repay the debt even in the second time. They again ask the creditor to get another rollover.
The company agrees again to give the customer some more time with the same extension fee. This is how the payday debt cycle starts.
What can you do to avoid loan sharks?
You may consider payday loan consolidation. It is when you combine multiple existing payday loans under one new personal loan, which you pay back in monthly installments at a lower interest rate. It is a good option against payday loan sharks. The payday loan consolidation will help you to reduce the huge interest rate charged on your loan amount, and you will be able to save money for sure.
You can reach out to payday loan consolidation specialists who will deal with your payday lenders. They will calculate your debt-to-income ratio and try to lower the high APR to an affordable interest rate. Generally, with payday loan consolidation, your monthly payment will be easier to manage and it will help you recover your financial health.
What other options could you use instead of payday loan consolidation?
Great news! You have alternatives to payday loan consolidation. You may consider:
- Debt management plan: You have to repay your payday loan with one single monthly payment. If you qualify for a debt management plan (DMP), it will allow you to pay back your debts in fixed monthly installments with an affordable interest rate.
- Debt settlement: This is a great option if you’re struggling to pay down debts. Debt settlement means a creditor has agreed to accept less than the amount you owe as full payment.
- Bankruptcy: You may be able to discharge your payday loan in bankruptcy. In some cases, bankruptcy can help borrowers who have payday loans they can’t repay. In Chapter 7 Bankruptcy, filers hope to earn a discharge of unsecured debt by the end of the process. Discharge means the debt is forgiven and doesn’t get repaid. The bankruptcy process begins with a petition filed by the debtor, which is most common
So, what should you do now?
Are you still unsure about what to do? Are you thinking about what will be the best move for you to escape the payday debt? You may use the free debt relief comparison calculator to compare the payments and cost of three options for getting out of debt.
It will make calculations and help you determine what is the right for your circumstances: payday loan consolidation, or debt settlement program, or debt management plan, or bankruptcy. We also recommend that you start saving money. Your first step is to figure out how much you spend. Keep track of all your expenses!