Instant loans companies will lend you a small amount of money with no need for collateral. These loans must be paid short-term and have high interest rates. They can be very helpful in desperate situations, as they loan money practically instantly. Before applying for one, it’s important to consider several factors to do it in a way that benefits you the most.
Here are 7 factors to consider when applying for an instant loan:
1. How they work
You can apply for an instant loan in person in a brick-and-mortar store or apply online. If it’s the first time you go through this process, it’s better to apply in person, as the associate will fill in the form for you. You will need to supply your bank account information, so the instant loan company knows how much your income is. This will help them determine how much money they can lend you. Once you apply, the associate will let you know in minutes if your loan was approved.
2. The funds will not be instant
It is true that they are called instant loans, but you will have to wait a couple of hours until the loan hits your bank account. Also consider if you apply for the loan late in the afternoon and banking institutions are closed, you’ll have to wait until the next business day for the money to be deposited in your bank account.
3. The interest rate is higher than normal
Instant loans are usually cash advances or payday loans. These types of loans have high annual percentage rates (APRs). Most payday loan places charge a 15% rate for each $100, which means $15 for every $100 you ask for. The loans are structured to be paid off promptly and have fees motivating you to do so. If you cannot pay off the loan in the near future, the fees can start adding up so please be aware of this.
4. They’re small loans
These loans are usually small amounts, around a few hundred dollars. These loans are not used to help you pay for a house or a renovation. They’re considered emergency loans to help you with groceries or small, unexpected expenses.
5. They have short loan terms
Instant loans don’t give you a lot of time to pay them. You must pay them off on your next payday or between one or two weeks after getting one. It’s important to consider this factor to make sure you’ll be able to get the money together you’ll need for repayment.
6. You will be approved with bad credit
This is one of the most attractive features of instant or payday loans. These money lending companies won’t look at your credit score or report. It is important to ask the associate if these loans are going to help you build credit history. And remember that even if they don’t, if you don’t pay these loans on time, this will affect your credit history negatively.
7. Specific instant loan regulations in your province or territory
The lowest interest rates are found in Alberta, New Brunswick and Ontario which are 15% for $100. Quebec has a law that all loans should have 35% APRs, which means there are no instant or payday loans in this province. Then you have Prince Edward Island, where the highest limit on fees is $25 for $100. It’s important to research first to make sure these lenders offer their services in your province and to know their interest rates, as this will help you prepare to be able to make the payment when it’s due.