Pros and Cons of Same-Day Loans
Same-day loans are available for those who need a little cash fast. They’re a fantastic option when time is limited or the borrower only needs a small amount of money. While they are easily accessible for most people and the money can arrive fast, they also have downsides. Before applying for a same-day loan, understand all the pros and cons to make a more informed decision on whether this is the right option.
Pro: Fast and Easy Application Process
The reality is that applying for a same-day loan is incredibly easy and won’t take long to do. There are minimal requirements, such as being at least 18 years old, having a bank account, and being able to provide proof of income. If the borrower meets these requirements, they can fill out the application in minutes and receive the money the same day. To speed up the process, have any required documents handy during the application process.
Con: Limited Amount of Funds
Though it is fast and easy to get the funds, there is only a limited amount available for borrowers. In most cases, the cap for a same-day loan is $1,500. It will be enough money for most small emergencies, like minor car repairs, paying for utilities, or getting a new refrigerator to replace one that broke. However, it won’t be enough to purchase a new air conditioner or car. Borrowers must be sure the amount they can borrow is sufficient for their needs.
Pro: Get the Cash Fast
Same-day loans are named as such because it’s possible to get the money in hand the same day as the application is approved. Depending on what time it is when the borrower fills out the application, the lender could approve it the same day, which means borrowers can get the money they need in as little as a few hours. If the borrower fills out the application later in the day or over the weekend, the lender may not approve it until the next business day.
Con: Pay Off Loan Faster
Borrowers can pay off a same-day loan in monthly installments, but there are fewer installments than a traditional loan. Instead of having a year or more to pay off the amount owed, the borrower typically pays off the same-day loan within three to six months. The first payment may be due as early as the borrower’s next paycheck. Borrowers must understand when they’ll make payments for the loan to avoid missing deadlines.
Pro: No Credit Check
As long as borrowers meet the minimum requirements for a same-day loan, they are approved. There is no credit check required for this type of loan. Borrowers who have a low credit score, no matter the reason, aren’t blocked from being able to access a same-day loan. Plus, since there is no credit check, there are no points taken off the borrower’s credit score.
Con: Might Not Help Credit and Can Hurt It
Most companies that offer same-day credit loans do not report to the credit bureaus unless the borrower does not repay the loan. If the borrower makes the monthly payments on time, it will not be reported and won’t help improve their credit score, and it simply doesn’t make a difference as far as the borrower’s credit is concerned. If the borrower doesn’t make the payments on time or fails to repay the loan in full, the lender can report it to the credit bureaus, and the borrower’s credit score may decrease.
Pro: No Security Needed
Unlike a title loan or a pawn loan, lenders don’t require collateral or security for a same-day loan. Borrowers do not have to have a cosigner, either. While it is still crucial to repay the loan entirely, borrowers don’t have to worry about losing their vehicle or another valuable item if they make a mistake and don’t pay off the loan. Same-day loan companies simply require proof of the ability to repay the loan before lending the funds.
Con: Higher Interest Rate
Since there isn’t any collateral needed, same-day loans often have a higher interest rate. The interest rate is the amount paid on top of the loan itself, and longer loan terms may equal paying a larger interest amount over the loan’s life. Borrowers should look into the interest rate before accepting a loan and make sure it is feasible to pay both the original loan amount and the interest with their monthly payments.
Pro: Easier to Pay Off
Payday loans are another common type of fast loan, but they must be paid back in full with the borrower’s next paycheck. Doing this often leads to a circle of borrowing and repaying that’s hard to escape because the borrower has to use so much of their check to repay the loan.
On the other hand, Same-day loans are paid off over time, which means a lower payment each month than a payday loan and more time to pay it off. Most borrowers find this a lot easier and don’t have to worry about getting another loan just to make it to the following paycheck.
Con: Monthly Payments are Higher
While the payment isn’t as high as it would be for a payday loan, same-day loans often require a higher payment than standard loan options. If everything else is similar, paying a loan over a year means smaller payments than paying one off in three months. Borrowers should know the total amount that will be paid each month and make sure it fits in their budget before applying for a loan.
When money is tight and an emergency happens, it can be hard to find enough cash to cover everything. However, applying for a traditional loan may not be the right option, either. Instead, a same-day loan provides fast access to additional funds and gives the borrower time to repay them. If you need a little extra money to help handle an emergency, no matter the situation, consider applying for a same-day loan. Visit King of Kash to learn more about loan options and how to apply.
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.