Online loans are a great option for many people who need quick and easy financing. Online personal loans allow you to get funded without going to a traditional bank. These loans can be used for debt consolidation, medical bills or even business loans.

Features

• Same Day Funding. Online lenders often fund same day, so you can get your loan funds fast. This is especially helpful for those who need immediate financial help for unexpected expenses or to consolidate debt.

• Soft Credit Check. During the online loan application process, online lenders do a soft credit check instead of a hard credit inquiry. This means your credit score isn’t affected during the initial application process, so you can shop around for loan options without damaging your credit history.

• Flexible Loan Terms. Online personal loans have flexible loan terms, including different loan term lengths, monthly payments and minimum credit score requirements. You can find online personal loans for fair credit, bad credit or excellent credit that fit your financial situation and payment ability.

• Automatic Payments. Many online lenders offer automatic payments. This feature ensures your monthly payments are made on time, so you don’t get charged late fees and improve your overall credit history.

Pros and Cons

Pros

1. Easy Application. Online loan application is simple and can be done from home. No need to visit a financial institution or bank in person.

2. Fast Access to Funds. Online lenders fund same day, so you can get your loan funds fast. This is especially helpful for unexpected expenses or emergencies.

3. Flexible Loans. Online personal loans have many loan options and loan term lengths for fair credit, bad credit and excellent credit. So more people can find a loan that fits their financial situation and payment ability.

Cons

1. Origination Fees. Some online lenders charge origination fees which add to the loan cost. Borrowers should review the origination fee details before committing to a loan.

2. Higher Interest Rates. Those with poor credit or bad credit may get higher interest rates than traditional banks or credit unions. This can add to the loan cost over time.

3. Scams. Not all online loans are from reputable companies. Borrowers should make sure they are dealing with a legitimate online financial services company to avoid scams and fraud. Verify the lender’s credentials and read reviews before applying.

How to Apply for an Online Loan?

1. Choose A Lender. Select a reputable online lender that is state licensed and federally regulated.

2. Gather Required Documents. Collect your pay stub, social security number, bank account information and proof of income.

3. Fill Out The Application. Fill in the loan application form with personal details, employment information and loan amount. Apply online or in person.

4. Review The Loan Agreement. Review the loan agreement carefully, make sure to read the interest rates, fees, repayment terms and the due date.

5. Get Loan Funds. Once approved, get the loan funds deposited into your bank account or prepaid card account, usually the same business day.

Requirements

According to the U.S. government’s Consumer Financial Protection Bureau (CFPB), to get a loan most payday lenders only require that borrowers:

1. Age. Applicants must be at least the age of majority, which is 18 in most states, some states require 19 or 21 years old.

2. Active Checking Account. A valid and active bank account for the loan funds to be deposited and for the lender to withdraw repayments.

3. Proof Of Income. Borrowers must show proof of regular income, such as pay stubs, to show they can repay the loan.

4. Valid ID. Borrowers must present valid ID, which includes social security number, to verify their identity.

How to Get the Money

1. Direct Deposit. The most common way is direct deposit into your bank account. Once your payday loan application is approved, the payday lender will deposit the loan funds into your active checking account, usually the same business day.

2. Prepaid Debit Card. Some payday lenders offer the option to load the borrowed amount onto a prepaid card account. This is good for those who don’t want to use their bank account.

3. Cash. In some cases, especially with in-person payday lenders, you may get the borrowed amount in cash. But this is less common than direct deposit or prepaid card.

4. Check. A few payday lenders may give you a check for the loan amount, which you can then cash or deposit into your bank account.

Payday Loan Rates

Payday loan rates typically range from $10 to $30 per $100 borrowed depending on state laws and borrowing limits. A typical fee is $15 per $100 borrowed which translates to an annual percentage rate (APR) of around 400% for a 2 week loan. For example, if you borrow $300 you would need to pay back around $345 by the next payday. These rates are much higher than other types of loans such as personal loans or secured personal loans.

Payday lending is allowed in 37 states, 11 states and D.C. have strict regulations or interest rate caps that limit or prohibit payday lending. Some states like Arkansas and North Carolina have repealed their payday lending laws and others like D.C. have banned it altogether.

18 states and D.C. have usury rate caps, often at 36% APR, to curb high cost payday lending. States like Nebraska, Hawaii, Illinois and New Mexico have recently enacted such caps, it’s a growing trend to regulate payday loan rates.

The highest payday loan rates are in states like Texas (662%), Missouri (652%) and Delaware (639%). On the other hand, states like Oregon (140%), Maine (228%) and Iowa (247%) have lower rates. Some states like Washington and Virginia have additional regulations to limit the number of payday loans or extend the repayment period to avoid debt traps.

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