No Credit Payday Loans
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Thousands of people use no credit payday loans each year to cover expenses between pay periods. Often referred to as "cash checking" or "payroll advances," these instant cash loans can be applied to anything from unexpected car repairs to medical bills. All a borrower needs is a checking account and a current job. Lenders don't check histories or scores. Money is quick and easy to access, but comes with high fees and interest rates. No collateral is necessary - just a post-dated check or debit authorization to secure payment within a few weeks or after the next pay period.
Although no credit payday loans are set up to provide people with one-time assistance for emergencies, critics argue that they proliferate the debt cycle, dragging individuals further and further into a financial hole. About 90% of borrowers request money five or more times each year, costing $4.2 billion in fees each year. Typical fees begin at $15 or $20 per every $100 loaned. Interest rates can fluxuate from 30% to 5,000%, compared to 12% on a credit card or 7% for traditional financing. Financial counselors advise drawing money from savings accounts or using a credit card instead of no credit payday loans for emergency purposes. But many people don't have that option. Subprime borrowers with bad financial histories often cannot get approved and don't have the money in savings to cover emergencies between paychecks. If money becomes tight one month, the fees for a payroll advance might be cheaper than fees associated with bouncing checks for insufficient funds. Most banks charge $20 to $30 for each bounced check. Add that cost to late fees on unpaid bills and the amount adds up quickly. Payday loans usually average around $200 to $300 - just enough to tie individuals over to their next pay period. Most lenders will approve loans up to $500 or $1,000 depending on state regulations.
No credit payday loans may be risky but are becoming more and more popular each year. Bank regulations in the late 1980s, early 1990s caused banks to cut out smaller, short-term financing, leaving a gap in the industry that gave birth to payday lenders. Between 1992 and 2001, lending increased from 300 loans to over 10,000. Today, individuals needing cash quick can borrow money from approximately 22,000 payday lending offices across the United States. Most establish offices in neighborhoods and become well-known by their customers -- generally young middle class couples with children who don't yet own homes and therefore have no equity built to borrow against. Since these lenders don't check with credit bureaus, borrowers can get a quick loan without it appearing on their record. Approval is almost 100% guaranteed. Individuals with negative credit histories have often used payday loans to raise credit scores. If payments are made on time, borrowers can request the lender to submit a report to the three credit bureaus: Experian, Trans Union, and Equifax. "Stand fast therefore in liberty wherewith Christ hath made us free, and be not entangled again with the yoke of bondage." (Galatians 5:1)
Most states regulate lenders of no credit payday loans, limiting the amount of interest rates and fees charged to borrowers. Regulations vary greatly from state to state. Only 39 states approve cash advance lending at all. Twelve states and the District of Columbia cap interest rates at 36%. Some states only offer income-based financing tied directly to the net income of the borrower. Most states limit or do not allow lenders to rollover loans into another determined period. Rollovers allow borrowers to extend the payment period of their contract to another defined term, usually to another pay period. In these cases, borrowers only pay additional fees and are not charged interest during the rollover period. The Community Financial Services of America (CFSA) also promotes regulation of no credit payday loans. CFSA lender members are required to adhere to very specific industry standards set by the organization to protect consumers. CFSA regulations are often above and beyond state regulations to keep the industry in check. Although many lenders operate on their own, the CFSA claim that half of the industry are members.
There are many alternatives to cash advance financing, including credit cards, borrowing from friends or family, and asking an employer for an advance. Some banks still offer small traditional financing at much lower rates and longer pay back terms. Creditors sometimes will also give a customer more time to pay a bill in extenuating circumstances or they will negotiate with a customer on lower monthly installments. Financial counselors advise that if possible, individuals should build a cushion into their savings, suggesting a minimum of two months' salary to cover household expenses, rent, and other necessities. If approved, credits cards can offer a good safety net in case of an emergency.
But if these options aren't available, no credit payday loans can provide the cash individuals need to get through a difficult month. Financing can be approved quickly and easily, especially online. Money is usually available within 24 hours. Be sure to look around for a reputable lender who won't overcharge in fees and interest rates. Borrow no more than what can be paid back in the next pay period. Then, pay back the loan as soon as possible so not to incur additional fees and interest. If used wisely, no credit payday loans can be an asset, not a liability.
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