Have you ever needed to buy something that you didn’t have the money for? If everyone in America needed to have the full amount of money in their savings account for every purchase, almost no one would own their car or own their house! Thankfully, loans are a financial tool that provide people a way to have access to money they otherwise would not have access to. Individuals and businesses borrow money in the form of a loan so they can make expensive purchases and pay back the money they borrowed for a long period of time.
When you think of loans, you might think of loans to get a house or buy a car. However, loans do not just come in these forms. Billions, if not trillions, of dollars are borrowed every single year in hundreds of different ways. From student loans and credit cards, to pawn shop loans and billion dollar loans to corporations, loans allow spending, building, and innovating to happen much quicker.
What if you’re not a gigantic company and you don’t need a billion dollars? What if you don’t need thousands of dollars to buy your new stallion of a car? What if you just need $500 to get through a pinch or to buy a nice gift for your mother. Is there a loan agreement for you? You bet.
These types of loans are called “payday loans.” Let’s look at exactly what they are, and how you can get them.
A payday loan is a type of short term loan that is much smaller than a typical loan term. Loans like auto loans or boat loans might be for a few thousand dollars, and are repaid over a few months. Loans like mortgages are for much more money and are repaid over a much longer time, usually a few years.
Payday loans will generally be $500 or less, but the highest payday loan amounts vary due to different state regulations on these loans. Because they are so small, they can usually be paid off very quickly. Oftentimes, they are paid off in a few weeks and in one lump sum once the borrower gets their paycheck, hence the name “payday” loan.
Just like other loans, most payday lenders check your credit report and your credit score to make sure you will be able to pay back your loan. Since payday loans are comparatively small, lenders are willing to take more risks when it comes to lending that money. Having a borrower default on a billion dollar loan hurts much more than a $500 loan! Because of this, payday lenders offer these loans to individuals with poor credit, since individuals with poor credit are considered risky and more likely to default on their loans. This comes with a caveat though. Payday loans have higher APR or annual percentage rates, which means you pay higher interest rates on these loans than others.
Because of the high APR and very short repayment periods, payday loans often have the reputation of having predatory practices on their customers. This has caused some states like Arizona, New Jersey, and Connecticut to outright prohibit them. While there may be some truth to loan sharks and other payday lenders taking advantage of their customers, there are companies like Possible that seek to build value for their customers through these short term loans.
Overall, payday loans are a different type of loan that allow borrowers to have access to small amounts of money that are repaid in a short amount of time.
$500 payday loans are surprisingly unique. There are certain aspects of these loans that arguably make them the fastest and most widely accessible loans available to people. Who would have thought loans could be so cool?
Primarily, these $500 payday loans are one of the most accessible loans. Individuals looking for these loans can apply for them right on their phone. For other loans, your lender might want you to come into their office or their bank branch so they can speak with you directly. There may be underwriters that look through your loan application, as well as your credit report and credit score so they can get a better understanding of you. This process can be tedious. However, many of these payday lenders use computers to automatically approve or reject their customers, so the process removes many of these roadblocks .This way, so you can easily have access to a loan without the hassle.
Likewise, these loans are arguably the fastest way to borrow money. If you apply for a loan at other financial institutions, they could take a few days to look over your loan application to decide if they want to approve you or not. Well, if you need just a small amount of money quickly, it makes no sense to wait long periods of time for it. Lenders that offer $500 loans can often approve your loan within the day, or if your Possible, you could have your loan approved and cash in your checking account within minutes.
This combination of speed and accessibility allow these $500 loans to be very flexible for customers. Unlike other types of loans, they can have access to money at the drop of the hat if they are in a squeeze financially.
When you apply for any type of loan, the lender will want to make sure you will be able to pay your loan back. They will likely check your credit score, your credit report, and your credit tradelines. Looking at these allows the lender to see various aspects of your credit, or your ability to repay loans. Such aspects include your payment history, the length of your credit history, and how much of your credit you are using, among other things. They will then use this information on you to decide whether or not to lend you the money.
In general, payday loans are more widely available and the criteria to get them is much simpler for borrowers than typical loans. The more expensive the loan, the better credit the lender will want to see for the borrower. Since these 500 dollar loans are obviously much smaller than a mortgage loan for example, the criteria to be eligible for these loans is much more lenient.
But what does this mean? What is a lenient criteria for a loan? For larger loans, one such criteria could be the credit score. A “good” credit score is anywhere from 680-740, and anything higher than this is considered an “excellent” score. Anything below this and you will likely get your loan application denied.
However, for $500 payday loans, your credit score can be much lower than this and you can still be given a loan. In general, you need to prove that you are above 18 years old and that you have some source of income. If you can prove this, there is still a chance you can have your loan application accepted, even if your credit score is poor.
We’ve gone over exactly what these loans are and what you need to get one, but why should you get one? Why should you pay higher interest and have a shorter repayment period on your 500 dollar loan when you can find better terms somewhere else?
Sometimes, you just need a few extra dollars. You might need another $50 to pay your utilities bill that was a little more expensive than anticipated, or you might need $300 to pay an unexpected medical expense. Whatever the situation, there’s no need to apply for a big loan or spend time at a bank branch trying to get that loan from one of these lenders. If you were to get a $5,000 loan and you only needed $100 of it, you still have $4,900 left over, but you are going to have to repay $5,000 with additional interest as well. If you need $100 and get a $100 payday loan, your interest rate will be a little higher but in the end you will be paying a lot less money.
In terms of paying your loan off quicker, there is something to be said about getting your loan over with so it is not looming over you anymore. However, you may not have the luxury of being able to pay it off that easily. Thankfully, Possible allows you to extend your payments on your loans up to 29 days, right within the app. Traditional payday lenders likely won’t allow you to do this and instead will be very happy that they can collect all the interest they can!
Going back to the criteria for a loan, there are certain things a direct lender looks for when they are looking at your loan application. Apart from more obvious things such as an active bank account and needing to be 18 or older, there are some other criteria you may not know when it comes to getting a loan. Let’s go over them in some more detail.
Whatever the lender, they are almost definitely going to want to see that you have a source of income. Whether your source of income is from a job or you are getting monthly payment support from your family, welfare, or your investments, the lenders will need to see if you can pay their money back.
If you have no job or no source of income, you can pretty well assume you are not going to get your 500 dollar loan approved.
As mentioned earlier, a higher loan amount will require a higher minimum credit score. However, payday lenders and other lenders like Possible offer smaller loans to those with poor credit. While getting your 500 dollar loan does not just depend on your credit score, it carries a lot of weight. Each lender's cutoff for credit score will be different, but something around 500-640 should be enough to get your loan approved with these lenders.
Unless you have a savings account that grows on a tree, you know that every dollar counts. When it comes to payday loans, this is no different. You want to get a payday loan that not only will charge you less, but will be more forgiving when you are paying it back. Let’s take a look at how much some typical payday loans would cost. Since the loan amount and APR can change from state to state, let’s pick Washington state to look at.
With a typical payday loan of $200, you are likely paying it back within two weeks. You can reasonably expect that when everything is said and done, you are paying the original $200 back, along with about $20 in interest, bringing your total to $220. This comes out to an APR of 390%.
With Possible, your payday loan of $200 could be repaid within 8 weeks if need be. Your interest in the state of Washington would amount to around $30, bringing your total repayment to $230. But wait, that’s more than the traditional payday lender, right? Well yes, but wouldn’t you rather be able to pay back $230 over 8 weeks than have to repay all $220 back within two weeks? Further, this lower interest over an extended repayment period brings the total APR of a Possible payday loan to 151%! Almost 200% less than the other guys.
So, you’re in a pinch, have bad credit, and need $500 fast, but you don’t want to fall in a payday loan cycle, where do you turn? At Possible, we feel that we have a great product that is great for our customers. While our small personal loan options would seem to put us in the “payday lender” category, we do not call ourselves payday lenders and nor are we like a traditional online payday lender.
As mentioned earlier, Possible offers 500 dollar loans to customers that have poor credit. We understand that many potential customers are caught in a catch 22 with their credit. In other words, they have bad credit and because of this, they can’t get a loan that would help them get good credit. This is an unfair aspect of lending that we want to change. Unlike other lenders, repaying your loans with us actually builds your credit. Since our loans have lower APR and repayment periods you can extend, our loans are not only easier to pay off but they build value for you.
Possible is looking to be a rescue boat in a pool full of sharks (pun very much intended). If you are in need of a $500 loan, consider Possible as your option. Download our app today and get started.