The biggest problem with financial emergencies that crop up without warning is not the issue of finances; the key issue is the time available to secure the necessary emergency funds. The availability of payday loans with no credit checks means there is a route to immediate loan funding.
In most cases, loan approval process takes at least 24 hours, though some lenders have been able to cut that down to same day approval, with next day funds transfer. But emergencies usually need to be dealt with immediately, so access to cash within hour of making the application is essential.
Normally, loan approval with bad credit can be a challenge, requiring some time to carefully compile the application. No loan is approved without satisfying the set criteria, but a payday loan has a different set of criteria to satisfy.
What Does No Credit Check Mean?
In truth, the availability of payday loans with no credit checks is not news. For decades, the two have gone together in perfect harmony. But credit checks are an essential part of the approval processes for most other loans, with lenders wanting to establish just how risky lending to the applicant would be.
The absence of a credit check process effectively means that even applicants who have consistently defaulted on their loans can be considered on a par with excellent credit borrowers. The perceived risk lenders take, however, is countered by the fact that many bad credit borrowers had excellent credit histories before the economic downturn.
With this in mind, granting approval with bad credit is no gamble. In fact, the key point is that the applicant has a paycheck that is large enough to repay a high-interest loan. This is because a payday loan is granted on the back of an upcoming paycheck.
Low Loans Limits
While lenders are taking a risk when they grant these loans, precautions have been made to contain the potential losses. First of all, repayments are generally made in one go, so there is little chance to default on the loan. But also, payday loans with no credit checks have a loan limit of $1,500.
With the interest rate charged very much higher than normal (some as much as 30%), lenders have also ensured their profits. These loans, after all, are specifically for those seeking emergency cash fast. In fact, approval with bad credit can be granted within just a few seconds, with the cash deposited in the bank account of the borrower just 1 or 2 hours later.
Normally, a small loan would mean the extra debt is kept to a minimum. But with very high interest charged, the challenge to meet repayment in full within a very short loan term (as short as just 14 days) is significant. Unfortunately, repaying payday loans in full can leave little over with which to meet the usual monthly obligations.
Payday loans with no credit checks are proving to be hugely popular, despite the high interest rates and expensive repayment totals. The loan type is named so because they are approved on the basis of an upcoming paycheck, and not due to any of the usual criteria.
Speed of approval is accomplished because the only real issue is whether the repayments will be made - and usually they are. In fact, even at a time when approval with bad credit is a hugely popular financing option, many borrowers still have a need for payday loans. This is because, in certain circumstances, the need for fast cash can override any need for a good deal.