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Five Interesting Things to Know About Instant Loans

When you are in a financial hurry, an instant loan may sound like what you need.
While some payday loan lenders may use the flashy name of "instant loan," many of these loans are actually payday loans or cash advances, which are loaded with bad terms and still have eligibility requirements. Also, even if it is approved, you probably won't get your cash instantly.


If you are considering an instant loan, here are five things you should know first.
What you should know about instant loans so you can easily compare short-term loans online



1. How instant loans work
You can usually complete an application online or in person. The application will include the amount that you want to borrow and the repayment period. You must also provide personal information, depending on the lender, such as your income Social Security number, and debts, bank account information and email address.
The lender generally promises to respond in minutes and deposit funds into your bank account if approved. But even if they approve it, in some cases it can take a business day or two, or even more, to receive the funds.  
2. They may not be instantaneous
While the loan application process can be faster in person, it usually takes time, between a few hours and a few days, for a lender to make a decision on an online application and deposit the funds in your bank account if it is approved.
For example, if you submit a request after a certain time of day, you may not receive the funds until the next business day. You may end up waiting even more if the lender needs more information from you.
 
3. You can pay a high-interest rate
The loans that are marketed as "instant loans" actually cash advances or payday loans, which are known to come with rates that are equivalent to very high APR rates. According to the Office of Consumer Financial Protection, payday loan lenders generally charge fees of around $ 15 for every $ 100 borrowed, according to the terms of the loan and the laws of your state.
 
This is equivalent to an APR of almost 400% for a two-week loan. Other instant loans may charge even higher rates, with APR equivalent of around 700% to 900%.
 
4. Generally, they are small loans
This is not the type of loan you are requesting if you want to finance a major home improvement project. The amount you can borrow is generally low, around several hundred dollars, because they are generally considered emergency loans.
 
5. You can have a short term loan
Short terms loans are another hallmark of payday loans. You may have to pay your loan as soon as your next payday or within a week or two. This does not give you the time to raise money for reimbursement.
 
What are my alternatives?
Because instant loans have high-interest rates and short terms, try using them only as a last resort. You better find an alternative. Here are some other options to consider.
A personal loan for bad credit: some lenders specialize in personal loans for people who do not have excellent credit. Personal loans can also be a good option if you need more than a few hundred dollars to help you.

An alternative payday loan: These small loans are offered at federal credit unions and range between $ 200 and $ 1,000. You will have to be a member of the credit union for at least one month to apply for one. But your loan application fee will not exceed $ 20.

A cash advance with a debit or credit card: if you already have a credit card, you can apply for a loan against your available balance. But you will want to check your card terms: a cash advance may have APR than your standard APR, and the credit card issuer may charge a processing fee.

A nonprofit credit counselling agency: A credit counsellor can help you find a long-term financial solution for your money problems, such as creating a budget or entering into a debt management plan. For these options, be sure to ask about the payment plan and find out if there is any cost involved, such as setup or monthly rates.