“No denial payday loans, direct lenders only” is meant to make you think that anyone can get quick payday loans online. Payday lenders will advertise that you can get guaranteed payday loans with bad or no credit for cheaper rates than other options. This is essentially untrue. All lenders have some requirements for the loan approval process, and the interest rate is almost always going to be more expensive than for other types of loan products.
Imagine that you’re already living paycheck to paycheck when suddenly your car breaks down, your child needs a wound stitched up, or your water heater kicks the bucket. You don’t have an emergency savings fund, or even a credit card, so where are you supposed to come up with that extra $500 or $1,000 that you need right away?
This is when it might seem like a good idea to look for a payday loan direct lender. You can probably get the money today or tomorrow and you have a couple of weeks to pay it back, so problem solved. Or is it? What is the interest rate? And are there any hidden fees? These are all questions to ask before falling down the rabbit hole of direct payday loan lenders.
What are payday loans?
Payday loans, including “no denial” payday loans, are designed to be small, short-term loans that need to be paid back, in full plus interest, usually within two weeks. Payday loans, also known as paycheck loans, are literally promoted as a means to get you from one paycheck to the next.
You can get a payday loan at a storefront facility or, increasingly, online. They are unsecured loans, meaning there is no collateral to back up the loan if you default. This is a logical reason for payday lenders to offer paycheck loans for ridiculously high interest rates, which are often depicted as quite reasonable until you read the fine print.
The hidden dangers of payday loans
Direct payday lenders may not voluntarily disclose the actual interest rate or other costs such as late fees, rollover fees, or other items that can add to the total cost of the loan. It’s up to you to carefully read the loan agreement to discover any hidden fees you could be charged on top of a high interest rate.
A payday loan direct lender will also promote their offers as bad credit payday loans that anyone can get, regardless of what the credit reporting bureaus might have to say about the matter.
The reality is many payday lenders will do a credit check, but only a soft inquiry. This doesn’t affect your credit score but does give the lender an idea of your credit history and ability to repay the loan. While the criteria for payday loans are more flexible than with traditional lenders, if they don’t like what they see, you probably won’t get loan approval.
How to get payday loans
As previously mentioned, it’s a fallacy that absolutely anyone can get “no denial” payday loans, but it’s also pretty easy to make a loan request and get approved even with poor credit. The basic criteria to get a payday loan is as follows:
- Must be at least 18 years of age and a U.S. resident
- Must have a valid phone number and email address
- Must have an active bank account
- Must have a job with a steady income
If you meet the above requirements, making a loan request is pretty easy, especially if you’re applying for payday loans online, which is most common these days.
- Fill out a loan application
- Indicate the loan amount you’re requesting and submit your loan request
- Wait to see if your loan application is approved
You will often get a response very quickly and can receive your money the same day or possibly on the next business day. So it is a fast way to get relatively instant cash loans in the event of an emergency, but it should really only be considered as a last resort.
How do direct payday loan lenders work?
If you’re approved for “no denial” payday loans, which is not a guarantee no matter what you’ve been told, you can get your money in one of several ways. If you apply for online payday loans, your money will likely be deposited electronically, directly into your bank account. Otherwise, you may receive the loan funds by cash, check, or prepaid debit card.
As mentioned, you usually have two weeks to repay the payday loan. Unfortunately, because they’re short-term loans combined with a high interest rate, they can be difficult to pay back. If you can’t repay the loan, many direct lenders will offer to “rollover” your loan into a new payday loan that comes with its own interest and fees, which can lead to a vicious debt cycle.
In fact, the Consumer Financial Protection Bureau (CFPB) found, in their March 2014 study, that 80% of payday loans are rolled over or renewed within 14 days. It also found that the majority of all payday loans are made to borrowers who renew their loans so many times that they end up paying more in fees than the amount of money they originally borrowed.
How much do payday loans really cost the consumer?
State laws on direct lender payday loans or other paycheck loans vary from state to state, but most payday lenders charge a set fee per $100 borrowed. The fee could range anywhere from $10 to $30 per $100, says CFPB, depending on where you live, how much you’re requesting, and the results of your loan application.
This can be a very deceptive practice from the borrower’s perspective. For example, if direct payday lenders charge $15 per $100 borrowed, that might not seem too bad. On the face of it, it sounds a lot like you’re only getting charged 15%, right? A lot of credit cards charge more than that. However, if you’re borrowing $300 for a two-week payday loan, at $15 per $100, you will owe $345 when the loan term is up. That equates to an almost 400% annual percentage rate! And that’s just on the low end of “normal” for payday loans online.
The bottom line is, while direct lender payday loans might occasionally be necessary for an extreme emergency, they are not a long-term solution to your financial troubles. Instead, there are other steps you can take to avoid this predicament in the future.
Alternatives to payday loans
While there may be instances where your only option is to apply for bad credit payday loans, the best move you can make is to insulate yourself from that type of need by planning ahead.
For one thing, you can get pre-qualified now from multiple lenders — without a hit to your credit score. This can give you an idea of the interest rate, loan terms, and amount of money you might be able to borrow with a personal loan, for example.
Ask for a raise
Depending on how long you’ve been at your current job and your proficiency at the position, it might be time to ask for a raise or even promotion from the company you work for. It can be intimidating to ask for more money, but oftentimes if you don’t ask, you won’t get it.
If asking for a raise or promotion outright doesn’t sit well with you, consider requesting a formal review. This way you can sit down with your boss and discuss how you’re doing, what steps you can take to improve, and if there are any opportunities for advancement. You can also ask about a raise at this time. But even if you don’t get one, this is the appropriate time to ask when you can next expect to have another review to revisit the discussion.
Your manager or supervisor should appreciate your initiative and will hopefully think of you if a better position opens up or if there are other areas where you could take on more responsibility.
Get another job
If you find yourself running short of money on a regular basis — not just for emergency expenses — you may want to consider getting a side gig or part-time job to fill in some of the gaps in your income. The gig economy is always thriving and you can often pick up jobs on the fly if you have some extra time on nights, weekends, or whenever you’re not working at your primary position.
Assess your skills and see what might be a good fit for you to bring in some extra dollars every month. Maybe you could clean houses, wait tables, walk dogs, do yard work, or other odd jobs. Craigslist even has a gigs section where you might find some work or at least pick up a few ideas. There are many opportunities, including one-time jobs or focus groups that could net you a couple hundred dollars for giving your opinions on various products, for example.
Anything extra you bring in through side jobs or other work can give you some breathing room from your creditors, and you could use some of it to start an emergency fund.
Beef up your credit scores
Perhaps up until now, you’ve had poor credit history, but that’s easy enough to change if you work at it. The first thing you should do is request copies of your free credit reports at AnnualCreditReport.com. Everyone is entitled to a free copy every 12 months from the three major credit reporting bureaus — Experian, Equifax, and TransUnion.
Carefully look them over to make sure every account on there is yours and there’s nothing you don’t recognize. If there are any mistakes on your credit reports, you will need to dispute them in writing and have them taken off. That would boost your credit scores right away.
Other things you can do to improve your credit history are:
- Always pay your bills on time
- Pay off any high-interest debt
- Become an authorized user on someone else’s credit card who has excellent credit
- Get a secured credit card if you’re not able to get a traditional card
Alternatively, you might also want to consider hiring a credit repair company to help you get your finances in order, or you can do it by yourself for free.
- Payday loans are marketed to individuals with low income and bad credit to help them pay for unexpected expenses, such as car repairs or medical bills.
- While “no denial” payday loans are a misnomer, payday loans online are still fairly easy to get if you’re over 18 with a steady job and a checking account.
- A direct payday lender will often use methods to conceal from a borrower what the annual percentage rate for the loan actually is.
- Payday loans should only be used in extreme emergencies and should be vetted carefully. There are legit payday loans, but there are also a lot of scams or less-than-honorable payday loan direct lenders.
- To make more money to get you through emergency situations, consider asking for a raise or a promotion. If those aren’t options, consider getting a second job.
- Work on improving your credit history to make it easier to apply for (and get) loans or credit cards in the future.
View Article Sources
- CFPB Data Point: Payday Lending — Consumer Financial Protection Bureau
- What are the costs and fees for a payday loan? — Consumer Financial Protection Bureau
- Unsecured Auto Loans: 4 Reasons You Should Get One — SuperMoney
- High-Risk Personal Loans with Guaranteed Approval from Direct Lenders — SuperMoney
- Do No-Credit-Check Loans with Guaranteed Approval Exist? — SuperMoney
- Discover Personal Loans — SuperMoney
- Check City Payday Loans — SuperMoney