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Payday Loans for Bad Credit

It is very easy to find a payday loan when you have bad credit.  A payday loan is just what it sounds like, a loan that a lender expects the borrower to pay on her next payday.

Payday loans for bad credit are instant approval because the lenders can instantly look at your application and approve or deny it. The most common source of payday loans for bad credit is storefront lenders. These store front loans are instant approval because the employee who makes them sends the information into a central location for approval via computer.

Some of the companies that operate these store front lending locations also offer payday loans for bad credit online. The difference between these loans and the loans offered in the storefronts is that the loan is approved online and the money is dispersed electronically a to a bank account.

How Payday Loans for Bad Credit Work

Lenders are willing to give payday loans for bad credit to individuals can prove  that they have a reliable source of regular income. This source of income can be a job, a business with regular cash flow, a pension or a government benefit check.

The amount of the loan is usually limited by the amount of the steady income that a borrower can prove. Many payday lenders will demand proof of the income such as a paycheck or a bank statement.

Check Loans

A popular kind of payday loan for bad credit is the check or bank account loan. This loan is made to a person who has a checking account. The person agrees to have the amount of the loan repayment available in their bank account on a specific day.  Sometimes this is done electronically, traditionally the borrower wrote a check that the lender cashed on that day.

Drawbacks to Payday Loans for Bad Credit

The biggest drawback to payday loans for bad credit is that the borrower is usually required to pay back the loan fairly quickly. The lenders are willing to make these loans to people with bad credit if they know the money will be repaid in the near future. Most payday loans require repayment within two weeks or a month. A standard practice is to require repayment on the borrower’s next pay day.

Many payday lenders will charge a fee often $20-$50 to renew the loan if the borrower can’t repay the loan.  Others will charge a very high interest rate on instant loans. Many lenders will charge people with bad credit higher interest because they are taking a bigger risk by lending to such people.

Use Payday Loans for Bad Credit Sparingly

Generally, it’s a good idea to only take out payday loans for bad credit in emergencies or other situations when no other source of income is available. The high interest rates and fees charged on these loans can easily eat up all of your income. Therefore it’s best to only take out instant loans if you have no other options available.