Key Takeaways

Online payday loans are short-term, high-interest loans that provide you with small cash loans quickly. Many lenders offer these loans to those with bad credit, but you should be aware of the high borrowing costs.

Bad credit payday loans are short-term loans that you need to repay when you receive your next paycheck. If you don’t have enough money at the moment and need to make it through the next few weeks, a payday loan may be an easy, quick solution. But before you sign up for one, you should know that they come at a steep price.

Because of the high-interest rates and the shorter repayment terms, these loans can create a debt trap for many. 80% of people who take out a payday loan have to borrow funds again in 30 days. Read on to learn more about how these loans work, their benefits, drawbacks, and safer alternatives that you might want to explore.

What are Online Payday Loans for Bad Credit?

Payday loans are offered by lenders with physical storefronts as well as online lenders. In most cases, the eligibility requirements are quite lax and not based on your ability to pay. Here’s a detailed look at what these loans are.

Definition of Online Payday Loans for Bad Credit

Online payday loans for bad credit are payday loans offered by online lenders to borrowers with bad credit scores. These loans typically do not require any credit check and offer you access to cash quickly to cover emergency expenses or bills. You’ll then need to repay the loan along with interest in a short time, typically two weeks. The amount you can borrow will depend on the state where you reside. Payday loans are unsecured debt, which means you do not need collateral to borrow the funds.

$255 Payday Loans Online Same Day

Payday loans are not available in every state. Each state where payday loans are legal states the maximum amount that can be borrowed through payday loans. For example, California lenders can offer a maximum of $255 payday loans online. Here’s a quick list of the maximum amount you can borrow in different states:

  • California- $255
  • Louisiana, Minnesota- $350
  • Indiana- $550
  • South Carolina- $550
  • Michigan- $600
  • Washington- $700
  • Delaware, Illinois, Idaho- $1,000
  • Wisconsin, Oklahoma- $1,500

1-Hour Payday Loans, No Credit Check

1-hour payday loans with no credit checks are offered by online lenders that do not run hard credit checks on borrowers. The online application may be approved in under an hour and the loan amount is typically deposited in your bank account within one business day. You’ll then need to repay the amount you borrowed along with fees and interest when you receive the next paycheck.

Pros and Cons of Online Payday Loans for Bad Credit

Online payday loans can be risky if you do not know how they work and the costs they involve. Before you apply for a payday loan, consider these pros and cons.

Pros:

  • They are unsecured loans.
  • They do not require a credit check.
  • They are easy to qualify for.
  • They are easily accessible.
  • Loan approvals and access to funds are quick.

Cons:

  • They are very expensive.
  • They do not help you build credit.
  • They are considered to be bad debts and can be predatory.
  • You can get into a debt cycle if you roll over the loan.
  • If you fail to repay the loan, the charges can be very high.
  • The lender may sue you if you default on the loan.

Best Online Payday Loans for Bad Credit

Payday loan lenders need a license to be able to offer a loan online. When looking for the best online payday loans for bad credit, it is important to check the fees you’ll pay if your loan request is accepted, along with the average reviews and ratings the company has.

Reviews of the Best Online Payday Loans for Bad Credit

The top five most popular online payday loans for bad credit are:

The price of borrowing from each of these lenders depends on the state you are located in, the lender’s fees, and the amount you borrow. On average, the cost of borrowing $100 is $25. This makes the annual percentage rate of the payday loan as high as 664%.

How to Improve Your Chances of Getting Approved for an Online Payday Loan with Bad Credit

Online payday loans with bad credit are typically available to borrowers that do not have a good credit score. These are easy to qualify for as long as you have the documents required to get approved for the loan. You should also be careful while filling out the online form and ensure that you provide accurate details to improve your chances of getting approved for the loan.

Tips for Improving Your Credit Score

While payday loans are available easily even with a low credit score, you may be able to qualify for other types of loans with better terms and flexible repayment if you put in some time and effort into credit repair. Luckily, there are several ways to improve your credit, as listed here:

  • Review credit reports regularly.
  • Pay your bills on time.
  • Reduce the amount of debt you have to improve your debt-to-income ratio.
  • Deal with delinquencies instead of closing your old accounts.
  • Tackle debt quickly instead of putting it off.
  • Do not use over 30% of available credit.
  • Monitor your credit as you make these changes.

Tips for Finding a Reputable Online Payday Loan Lender

Before taking out loans, it is important to ensure that the loan providers you have shortlisted are legit. Here are a few tips on how to find a reputable online payday loan lender:

Check to see if the lender has a Better Business Bureau accreditation. This non-profit organization helps borrowers identify legitimate and reputable businesses across the U.S.  

Check to see if the online lender has contact details available. While most companies will have an email address and contact form, you should also have another way to get in touch with them through live chat, phone support, or a physical location.

Ensure that the loan company is upfront about the fees they’ll charge. Your loan contract should clearly state the applicable fees so you’ll know the cost of borrowing.

Read the fine print on the loan agreement to see if there are any hidden charges. If you have any questions, check the FAQ page on the lender’s website or get in touch with them to ask any questions.

Risks and Potential Consequences of Taking Out an Online Payday Loan with Bad Credit

Bad credit payday loans are an attractive, and sometimes the only option available to certain borrowers. But sometimes, these loans may put you in a worse position than where you were before you took out the loan. Be aware of the potential consequences and risks associated with payday loans before you decide to take one out.

Risks of Taking Out an Online Payday Loan with Bad Credit

Here is a list of the top risks of taking out an online payday loan:

Online payday loans come with very high interest rates when compared to credit cards and personal loans.

There are costly fees associated with these loans. For example, if you decide to rollover the loan the lender may charge you an additional fee.

Because of the high-interestinterest rates and fees, it is easy to get caught into a debt cycle where you continue to roll over the loan or take out another loan to pay off your old loans.

Payday loans are a temporary fix for a financial problem. These loans will continue to fuel your unhealthy spending and saving habits until you address the underlying problems and learn how to manage your finances.  

Potential Consequences of Defaulting on an Online Payday Loan

While it may seem like an easy task to pay back the $100-500 you borrowed as a payday loan, these loans are notoriously difficult to get out of. Missed payments or not paying off your payday loan on time comes with a hefty price as additional fees and interest will be added to your debt.

If you default on the loan, it can damage your credit score, making it even more difficult for you to get access to credit in the future. Additionally, the lender can take legal action against you. If the lender sues you and the court agrees, your wages may be garnished.

How to Avoid the Payday Loan Debt Trap

There are two ways to avoid the payday loan debt trap: making sure that you pay back the loan within two weeks, and finding a better alternative to get the funds you need.

Alternatives to Online Payday Loans for Bad Credit

The Federal Trade Commission cautions borrowers to try and find alternative loan options before you decide to take out online payday loans. Here are a few options worth considering:

If you are taking out a loan because you are having trouble keeping up with other bills, talk to your creditor to see if they have a solution. Most lenders are willing to work with borrowers to set up a payment plan or extending the due date if you have a good credit history.

Ask your employer if they can provide you an advance on your pay. Many companies offer a payday advance where you’ll be able to get cash fast, but without the high fees charged by payday lenders. Keep in mind that this will lower the next pay you receive.   

Borrow from friends or family if you are in a financial bind. If you decide to ask for help, be sure to pay them back on time to avoid damaging your relationships.

Consider taking out a cash advance. While you’ll still need to pay interest and fees, this will be less expensive than payday loans.

Review your budget to see if you can free up some cash by cutting down on things such as entertainment, dining out, shopping, and groceries. There are several ways you can save money and avoid taking out a payday loan.

Check to see if you can get overtime hours at your job or if you can take up a side job to increase your monthly income. This will eliminate the need to turn to online payday loans for unexpected expenses.

Tips for Repaying an Online Payday Loan

If none of the above alternatives work for you and you have to take out an online payday loan, there are several ways to repay your loan on time to avoid getting into a debt trap. Here are a few tips worth considering:

Only borrow as much as you need. Avoid borrowing too much because it will make it more challenging to pay it off later.

Create a repayment plan in advance so you’ll know exactly how you’ll be paying off the payday loan before the due date.

Do not take out any additional loans before you pay off the payday loan.

If you have multiple payday loans, consider debt consolidation. If you have good credit and can qualify for an installment loan at a lower interest rate, use those funds to pay off your payday loans. You’ll then have affordable installments each month. Consolidation loans with bad credit will still have a lower interest rate compared to payday loans.

Final Thoughts on Online Payday Loans

Online payday loans can help you cover short-term expenses and are available without collateral. The only catch here is that these loans come with very high-interest rates and fees. As a borrower, you should only consider online payday loans if you do not have any other alternative loan products available for your financial needs. Take a look at safer alternatives first, such as cash advances and personal loans.

If you have already taken out payday loans and have other forms of unsecured debt over 10k, TurboDebt can help you get out of the debt cycle. Our debt professionals can help you find the right debt relief option based on your financial situation. Connect with us today for a free consultation. Read our reviews to see how our debt relief services have helped thousands of clients.