Facing an urgent financial shortfall? Online payday loans promise quick cash with guaranteed approval decisions in as fast as 24 hours, with no credit checks. These short-term loans seem like convenient solutions when you need funds before your next paycheck. However, they also come with considerable risks and downsides. This guide will walk through the key pros and cons of seeking guaranteed payday loans online to help inform borrowers.
What are Online Payday Loans?
Payday loans are small cash advances designed to provide funds to tide you over until your next pay date. Rather than requiring extensive underwriting, payday lenders consider:
- Proof of income
- Existing debts
- Bank account history
Online payday lenders streamline this process with automated application systems. You complete forms, submit required documents, and receive instant qualifying decisions without an in-person visit. Approved funds get deposited electronically.
However, the convenience comes with very high interest rates and fees, often exceeding 500% APR. This makes online payday lending a very expensive source of financing.
Pros of Online Payday Loans
In urgent financial situations, the advantages of online payday loans make them appealing:
Quick and Easy Applications
Online forms take minutes. You avoid driving to a retail location or waiting for approval. Automated processes provide near-instant decisions.
Guaranteed Approval Decisions
Online lenders promise guaranteed credit checks and approval outcomes within 24 hours for qualified applicants. You know right away if you have secured the needed funds.
Fast Electronic Deposit of Funds
Once approved, the loan proceeds move electronically to your connected bank account by the next business day. No need to pick up a check or cash funds.
Simple Qualification Requirements
You only need a steady income source, valid ID, bank account information, and contact details. Bad credit is normally not an obstacle.
Access Anytime From Anywhere
Apply from home, at work, or on the go from your smartphone. The online process is quick and convenient 24/7.
Short Borrowing Terms Available
Some lenders allow you to select how long before your next paycheck you need funds. Terms can be as short as 7 days.
For those in immediate need, guaranteed online approval and fast funding can seem like lifesavers. But there are also considerable downsides and risks to weigh.
Cons of Online Payday Loans
While easy to qualify for, online payday loans have significant costs and hazards:
Very High Interest Rates and Fees
Online payday loan sites may not prominently advertise their full rates, but prepare for APR interest to exceed 500%. Origination fees and penalties add more costs.
Requires Full Quick Repayment
The full loan amount must be repaid by your next pay date, typically within 7-30 days. This can consume an entire paycheck.
Can Trap You in Repeat Borrowing Cycles
The short terms make it tempting to borrow again immediately or take loans from multiple sites. This leads to spiraling debt.
Risk Taking on More Than You Need
With money deposited electronically, it may be tempting to withdraw and spend more than you require. This increases costs.
Potential for Being Scammed
Some online sites are predatory lenders who lure you in but have hidden terms or outrageous fees. Do your research.
Still Credit Impacts if You Default
While no hard credit check to qualify, defaulting with non-payment can result in harm to your credit and collections calls.
The ease and speed of online guaranteed approval comes with tradeoffs. Make sure you consider the heavy costs and risks before moving forward.
Qualifying for Online Guaranteed Approval
Online payday lenders use automated systems to check basic requirements. You will likely qualify if you have:
- Steady income direct deposited to your bank account
- Valid ID and contact information
- An open/active checking account
- No recent bankruptcies or defaults with same lender
- Not taken the maximum payday loans permitted in your state
While approval may be guaranteed, you still must prove income, identity, and banking history. Having consistent pay deposited to your account for the last 2-3 months is key.
Costs and Fees of Online Payday Loans
Understanding the complete costs is critical before borrowing online. Fees can include:
- Origination fees, often $15-$30 per $100 borrowed
- High APR interest rates from 200% to over 500%
- Penalty fees for late payments, often $15-$50
- Non-sufficient funds fees if auto-debit payment fails
- Additional fees to extend (rollover) loans rather than repaying
These costs multiply quickly. A $500 loan repaid in 14 days with a $75 origination fee means you pay back $575 – equal to a 391% APR. Read all fee disclosures.
Steps for Responsible Online Borrowing
Because online payday loans carry risks and high costs, borrow responsibly:
- Shop multiple lenders and compare all fee amounts and APRs
- Never borrow more than you can realistically repay by your next check
- Avoid any lenders requesting upfront fees before approving you
- Mark your repayment due date on your calendar to avoid late fees
- Have a firm backup plan if unable to repay in full to prevent roll-overs
- Look for member organizations like Online Lenders Alliance who follow best practices
Taking these steps will help ensure your online borrowing experience goes smoothly at the lowest possible cost.
Alternatives to Risky Online Payday Loans
Before applying for guaranteed online approval, explore some less costly alternatives:
- Request a payroll advance from your employer if available
- Ask for additional shifts or freelance gigs to increase income
- Consider borrowing only necessary amounts from family or friends
- Use a credit card cash advance (if you can quickly repay your balance)
- Inquire about grace periods or extensions with debt creditors
- Investigate lower interest debt consolidation loans to pay off multiple balances
- Seek assistance from a non-profit credit counseling agency
These options provide funds without the sky-high fees and vicious debt cycles. Exhaust them first before turning to risky online payday lending.
Warning Signs of Payday Loan Dependency
While online payday loans provide quick relief, over-reliance can trap you in endless debt. Signs you may be dependent include:
- Frequently taking new loans out as soon as old ones are repaid
- Using most of your paycheck to pay off interest and fees, not the principal
- Having open payday loans with multiple online lenders simultaneously
- Finding you cannot cover basic living expenses without borrowing
- Hiding repeated payday loan usage from your spouse or family
- Becoming unable to pay other bills because loan fees consume your funds
If you exhibit these behaviors, seek help to change your borrowing and spending habits. Online payday loans are a short-term fix but long-term trap.
Summarizing Main Pros and Cons
In summary, online payday loans provide guaranteed fast approval and electronic deposit of funds which can be lifesavers in financial emergencies between pay cycles. However, the extremely high interest rates and ease of repeating borrowing cycles can lead to unaffordable debt traps.
Borrowers should analyze their budgets truthfully, shop lenders for the best rates, and use loans only for urgent needs they can realistically repay by their next paycheck. Payday lending online requires extreme caution. But under certain circumstances, it provides access to critical cash to get through short-term crises.
