I have been helping a client to consolidate his debt and I was having a discussion with him about same day payday loans. He revealed to me that he had wanted to utilize such same day online loans and I asked him to write about his experience. So here goes his story..
Recently I’d fallen into a bit of a monetary rut. I work as an assistant livestock veterinarian and my commute takes me on a 40 minute drive out of the city. With the daily to and fro, responding to outcall emergencies and the consultation trips to clients’ residences, you could say my trusty Ford is pretty much an essential tool for my job. But even the most stalwart of partners need a day off time to time, the intercooler gave out last Thursday and repairs were no small matter. My job is stable but modest which doesn’t enable me much savings and I was looking at a little under a cool two grand to get the whole matter sorted out.
I couldn’t afford to go without a personal vehicle for a day but at the same time didn’t feel comfortable dipping so far into my savings, especially still being so far from my next paycheck. I decided to take out one of those payday loans we’ve been seeing advertised all over the place to soak up some of the damage till payday rolled around. Plus, I needed the cash pretty badly and most banks take upwards of a week to approve the paperwork.
Bless my inner skeptic, for I was hesitant to proceed any further on to Advance America’s site. The search page that brought me there in the first place was lined with banner ads that sounded more like they came from my spam folder. The top hit for “Advance America” was my inquired site itself and the next 4-5 hits were PSAs and independent blogs warning about the shady nature of such payday loans. Checking out similar sites like Payday America and ACA Financials yielded the same results and I decided that I had enough.
I did some further probing and thank God I did. Had I gone through with the loan I’d be in a far, far worse off position than when I started. Here’s why I ultimately decided against sameday payday loans and why you should too if you ever find yourself in a similar position.
Online Loans Same Day are really Dubious
Apparently, gone are the days where loans worked simply and did their job. These transactions are supposed to be straightforward: all I want was to be trusted with a sum for my personal usage under the agreement that I’d repay it after a stipulated period, and the bank collects a reasonable (keyword being “reasonable”) interest fee at the end of it all for their trouble. If my credit score’s bad that means the bank has less reason to trust me, and I’ll probably get slapped with a higher annual percentage rate (APR) to reduce the potential loss my potentially irresponsible-default-prone self would inflict upon the bank. Harsh, but all in all fair enough.
So for sameday payday loans that offer the option of skipping the credit check stage and streamlining the approval process to within a mere day, one should naturally expect the APR to be a little higher than what conventional loans demand, right? Still understandable and still fair. Besides, how much higher could it be anyway? 30%? Perhaps 40% or even 60%? Fat chance, sunshine, how about somewhere in the ballpark of 400%. And those are just the starting figures.
Looks like no good deal arrives free of attached strings. Indeed, it’s not uncommon to hear of APRs running into the three figures range. This is the trade-off for allowing borrowers to skip the credit check sequence and to dish out that expedited one-day approval. Lenders have to hedge their risks somehow and good Lord they aren’t shy about it. In essence, even if I am well-behaved and offer repayment punctually, I’ll still end up way further in the red than I was to begin with. And that’s the best case scenario, lenders are all too happy to slap late repayment or overdraft charges or to claim whatever collateral you may have used to secure your loan. In fact, this is what payday lenders thrive on. Consider the demographic these loans are so aggressively marketed to: payday lenders are deliberately banking on the fact that most of their clients aren’t too well off and live from paycheck to paycheck, those who are the most prone to missing payments and liable for late penalties.
Same Day Loans Are Too Good To Be True
The aforementioned terms are what you get from the legit lenders. More often than not, the payday industry plays host to unscrupulous lenders who supplement their revenue with less than desirable practices.
The most common of these are hidden or baseless fees. Commonly disguised as “administrative fees” or similarly worded, these additional charges actually provide no corresponding service to the borrower and are just there to see what lenders can get away with. Real lenders will be able to readily spell out what fees are to be expected from the get-go and will be able to provide explanation for each item. Accordingly, be on the lookout for lenders that make sudden amendments to the terms or ask for additional fees that weren’t mentioned during initial negotiations, especially if they’re hesitant to elaborate what these fees are for.
Also be wary of the very real threat of identity theft. Since sameday payday loans skip the credit check stage there should be no good reason for lenders to request your social security number (SSN) and by no means should you allow yourself to be coerced into divulging it. Knowledge of your SSN is all some crooks need to take out loans, fake passports and conduct all manner of mischief under your name – see to it that they do not get the opportunity.
I Went To LendUp.com Instead
After becoming aware to the slew of pitfalls I’d be traversing should I take up a payday loan, I understandably wasn’t very keen on the prospect for very much longer. I sought alternatives such as negotiating a quicker approval with my bank (3 working days, still not ideal) and eventually a friend referred me to LendUp.com. They offer the same approval periods that payday loans promise but run a clean ship. It’s reassuring to know that they are an actual licensed money lender and while the rates are indeed higher than conventional bank loans (59% for $500 in my case), it’s much more agreeable than what I’d get at a payday lender. And most importantly, they actually are a clean business. The better your credit score, the better a deal you get and this is especially great for those with poor scores as it gives you a safe opportunity to build credit.
Tomorrow I’ll be picking up my dear Explorer up from the garage. While loans are never something I’d like to have to deal with, times like this do make me appreciate the relief and utility a strategic advance in cash can offer. If you’re ever in a similar situation, trust me, do yourself a favor and avoid the sameday payday loans route – there are much better avenues out there.
If you need a loan, do look at Lendup.com as a better alternative.