When a financial emergency comes up, you need extra cash to cover the costs and make ends meet. However, more often than not, you might not have enough savings to support an unexpected expense as quickly as possible. When this happens, one of your financial solutions is to take out a same-day loan.
If you're only hearing same-day loan for the first time, keep reading this article to learn what it is, and if it's right for you and your situation.
What Is A Same-Day Loan?
A same-day loan, also referred to as a cash loan, short-term loan, or emergency loan, is a type of loan wherein you can access funds instantly. If the lender approves your application, you can receive the loan proceeds on the same day you apply. It's one of the reasons why a same-day loan is beneficial when you're in urgent need of cash.
However, getting a same-day loan isn't easy. Although the online application process seems straightforward, you'll still need to meet the following requirements before qualifying for it:
- Personal Details
You need to provide some personal information when applying for a loan. These pieces of information are necessary to verify your identity and eligibility to take one. For example, you should be at least 18 years old at the time of application.
Also, your lender may require you to submit some necessary documents, including a Social Security number, driver's license, and birth certificate. As such, make sure to prepare these documents to speed up the application process.
- Stable Income
You may be eligible to take out a same-day loan if you have a stable job or source of income. The lender will check your employment history to determine your ability to repay the loan within the period agreed upon. Thus, whether your income comes from your monthly paycheck or investments, you need to submit proof of any of them to improve your chances of approval.
- Active Bank Account
Since the application is made online, the lender may require you to have an active bank account to deposit the funds once the loan is approved. Without an account, you may be unable to access your loan proceeds instantly.
As you can see, there are essential requirements to comply with before a lender approves loans with a same-day deposit. For this reason, it's important to shop around for the best lenders online and compare some information. Doing so can help you find the right lender who meets your loan requirements.
What Are The Pros And Cons Of Same-Day Loans?
Now that you're aware of what a same-day loan is, it's time to determine whether taking out is right for your needs. You can do this by familiarizing yourself with the pros and cons of same-day loans. These can include:
Same-day loans are popular with many people, especially when they need cash to cover emergencies. The following are some cons of taking out this type of loan:
- Fewer Requirements
Typically, there are eligibility requirements you need to meet before applying for a same-day loan. But, compared to other types of loans, same-day loans only come with fewer requirements. Most lenders don't ask for too many documents to prove your ability to repay the loan, like financial statements. They only require proof of regular employment and a bank account. This makes the approval process much easier and faster.
- No Required Credit Check
When it comes to traditional loans, most borrowers need to have a good credit score to increase their chances of getting approved. But, with same-day loans, your credit score doesn't determine whether you'll be approved or not. There are lenders who focus on your employment history instead of your credit rating. As such, no credit check is required when applying for same-day loans.
- Loan Is Unsecured
When getting a same-day loan, you don't need to put your home, car, or any asset as collateral. This means that if you default on your repayments, you don't need to worry about losing anything because same-day loans are unsecured loans. It's one of the advantages when you decide to apply for such loans.
- Easy To Access
With same-day loans, you'll get the money you need right away without leaving your house. As long as you have the necessary documents and bank account, you can apply for one in the fastest time possible. You can fill in an application form online and submit the papers, and once they’re approved, you can receive the money in your account in a few minutes or hours.
While same-day loans have advantages, there are also downsides that you need to keep in mind when taking out these loans for your needs. These can include:
- High-Interest Rates
Since lenders don't check your credit score, they usually offer same-day loans at higher interest rates. When you borrow a higher loan amount, it may be expensive to pay, resulting in further financial problems for you. To avoid such circumstance, it can be a good idea to take a small amount of money that you can fully repay using your next paycheck.
- Shorter Repayment Terms
Unlike traditional loans, same-day loans come with shorter repayment terms. Typically, most lenders require these loans to be paid within three to six months, making it difficult to manage their monthly finances. This is especially true if you've borrowed a large amount of money that should be paid within a short amount of time. Thus, if you have a limited monthly budget, getting a same-day loan may not be an excellent option as it may only incur you some debts.
- Lender's Access To Your Bank Account
When you can't pay your loan anymore, the lender will withdraw the cash from your personal bank account after receiving your monthly paycheck. Unfortunately, the lender's unexpected withdrawal may hurt your credit score, which you don't want to happen to you in the long run.
While a same-day loan can be a quick solution to your financial problems, it may not always be the best option for all emergencies. Therefore, if you want to know if it's the right one for you, keep the information mentioned above in mind. By doing so, you'll familiarize yourself with the things you need to know to make an informed and sound decision.