Life is unpredictable. At any moment, you could find yourself strapped for $100 if an unexpected expense or an emergency payment comes up and blindsides you. Thankfully, debt such as credit cards and loans allow you to have access to money you don’t have.
However, if you have bad credit you may find payday advance loans are one of the only places you can get money. Let’s take a deeper look at $100 payday loans and what you need to know about them.
What is a Payday Loan?
In the personal finance world, there are many types of loans. For example, you can get a mortgage loan for your home, an auto loan for your car, or even a boat loan if that’s what you’re looking for. There are basically loans for anything you might need to finance. Loans come in every shape and size and vary in amount and repayment terms including the interest rate.
Payday loans are one type of personal loan. While typical personal loans are usually larger and can get up to $100,000, payday loans tend to be no more than $500 and can be as little as $25. Payday loans can be used for a variety of purposes. If you struggle to make ends meet, a payday lender could help you hold over until you get to your next paycheck. If you have a medical emergency that needs to be paid for but you don’t have the money to do so, a payday loan can come in handy. Whatever the reason, a payday loan can quickly give you a fast cash advance when you are in need.
Payday lending is typically reserved for borrowers who have a poor credit score or have no credit history at all. Because the loan amounts are so small, lenders are okay with a few borrowers defaulting on loans. Since individuals with low credit scores are believed to be more likely to default on loans, they usually cannot get loans for a gigantic amount of money and are left with payday loans instead. Likewise, small loan amounts are one of the reasons why payday loans are able to be approved so easily, which translates to borrowers getting the money they need faster.
Unlike other loans and even loans of the same size, payday loans must be repaid much sooner. Typically, the principle and interest of the loan all need to be repaid within a week or two when you get your paycheck, hence the term “payday loan.” This makes payday loans much harder to pay back than typical loans. This paired with high interest rates are just some of the drawbacks payday loans have, which we will discuss later.
How Does a $100 Payday Loan Work?
Getting a $100 payday loan is a much simpler process than getting a larger personal loan. Wherever you are looking to get a payday loan, you will likely need to fill out a loan application. This entails you filling out a lot of your personal information, information about your bank or financial institution, as well as the details of the loan you are looking for like the loan amount you wish to borrow and for what reason.
Depending on your lender, the application process may feature some different criteria. For example, your payday lender may or may not check your credit score. If they do, they may have certain criteria you need to meet for your credit score, like a minimum credit score. If they don’t, you can get the loan whatever your credit history is. Similarly, some lenders may require you to have a regular source of income as well.
Once you get your loan application approved, your money will be deposited into your account. You can then use your $100 as you see fit. However, even before you begin spending your money you need to have a plan of how you are going to pay it back since your due date will be right around the corner in a week or two.
Depending on your lender, your interest rate will vary. Whatever your interest rate is, you will need to pay back the $100 payday loan amount as well as the interest. Again, this can vary but you can expect to pay somewhere between $15-$30 of interest. Likewise, you may encounter various fees. If you are late on a payment or if you want to rollover your balance to another loan you can expect to have to cough up some money.
Once your balance and interest has been paid off, your loan term is complete. Depending on your lender, successfully paying off your loan will boost your credit score. However, this oftentimes is not the case with payday loan lenders which we will dive into later.
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DownloadHow Do I Know I’m Eligible for a $100 Payday Loan?
Although requirements for payday loans are much more relaxed than for larger loans, there are still some criteria you will need to meet. Here are some of those criteria:
- 18+ years old
- U.S. citizen or Social Security number
- Government ID: Passports and driver licenses will do just fine for this requirement.
- Live in a state where payday lending is allowed: For reasons discussed later, payday loans aren’t allowed in every state. Some states have heavy regulations on payday advance loans and some have even outright banned them, like New York. Laws on payday loans are frequently changing so make sure to check if you can get a payday loan in your state before applying for one.
- Meet credit requirements: Some lenders will not check your credit score when going through your loan application, but many lenders will have a minimum credit score requirement you will need to meet if you want to get their loan.
- Regular source of income: Like credit score, some lenders will not require you to prove you have a regular source of income to help pay off the loan. However, most lenders will want to see you have a steady source of income. Some lenders do not allow income from gig-economy jobs like Uber and Lyft drivers to qualify as a “source of reliable income.”
Factors to Consider When Applying for a $100 Payday Loan
Taking out debt in the form of a $100 payday loan may or may not be a good decision for you. Debt is expensive and can oftentimes be hard to pay back, even if it is just $100. If you can’t pay it back, the consequences can be even harsher than just paying money in late fees. To know if you should get a $100 payday loan or not, consider these factors:
- What you need it for: A common piece of personal finance wisdom is to avoid debt unless you really need it. If you need $100 to make an emergency payment, that is a good reason to get a $100 payday loan. If you want the money to buy something for entertainment purposes, you are better off not getting a loan.
- You will be able to pay it off: If you do not have the income to pay off a $100 loan or if you have no intention of paying the $100 back, you should not get the loan. Failing to pay it back can be very expensive and can really hurt your credit score as well.
- Cost: Cost is an important factor in getting a loan that you need to consider. The cost of your payday loan will not be the same at every lender, so you should shop around to find the best price for you. Make sure you are also aware of any additional interest or additional fees before you commit to getting the loan.
- Terms of the loan: Like cost, you may find different repayment options from lender to lender. Some will require you to pay back faster than others. This can affect how difficult it is to pay back your loan so make sure you are aware of this too.
- Impact on credit score: Loans will often boost your credit score if you make successful payments consistently. However, payday loan lenders are some of the few lenders that oftentimes don’t build your credit score. If you are going to be working hard to pay back your loan, try to find a lender that reports your successful payments to a credit bureau so your credit score can be built up.
Why You Might Want to Avoid a $100 Payday Loan
A $100 payday loan might seem like a small amount of money that shouldn’t be too difficult to pay back. However, this is not necessarily the case.
Payday loans are part of a lending industry that is known for their predatory practices. Lenders in this industry have been busted time and time again for trying to keep their borrowers in debt. As we mentioned, debt can be expensive. Payday lenders charge high interest rates and exorbitant fees and purposefully make the loans hard to pay back. When the borrowers inevitably can’t pay back the difficult loan, they are forced to get another expensive loan to help pay back their previous one. This causes the borrower to get caught in a vicious cycle called a “payday loan trap”. This can financially ruin a borrower yet payday lenders continue to do this to their customers. Payday loan lenders go after the people with the least financial security and push them further into debt.
Likewise, many payday lenders never build your credit score. They are some of the only lenders that lend to people with poor credit scores, yet they don’t boost your credit score which makes it extremely difficult to dig yourself out of a bad credit score. These lenders want to make sure their borrowers always have bad credit scores so they are forced to get loans from them.
This dark underbelly of payday loans is the reason that payday loans have since been banned in many states like New York. Even if your state allows them, it's important to be aware of the danger of payday lenders so you don’t get hurt by them, even if you are just getting a $100 payday loan.
Alternative to $100 Payday Loan: Possible Finance
Here at Possible Finance, we understand how difficult it is to find a source of money if you have a bad credit score. We understand that with a bad credit score, payday lenders seem to be one of the only places you can turn to if you quickly need money to get you to your next paycheck. We also understand that payday lenders continue to harm their customers which leaves borrowers in a difficult situation.
Possible Finance wants to change this narrative. We work to provide a product for borrowers that gets them the money they need while also creating value for them in hopes our borrowers can graduate out of debt one day.
Our product at Possible Finance is a loan of up to $500. Once approved, you can get your money right into your bank account within minutes. Once you have your money, you begin paying back your loan with installments over the course of four weeks. If you are struggling to make a payment, you can extend your payment up to 29 days right within our clean and easy to use app.
We also like to call our loans credit builder loans. When looking at your loan application, we don’t check your credit score, which means you can have our loan whatever your credit history entails. Further, when you successfully pay back our loans we report to the credit bureaus which builds your credit score over time. Unlike payday lenders and our competitors, we offer loans while also building your credit at the same time.
Overall, we know that building credit is hard, especially if your credit score is already very well. We also understand that payday lenders are happy to give out expensive debt but not build value for their borrower if they are able to pay it off. We hope to be a safety line where borrowers in need can get the money they desire but also come out the other end better than when they started.
Interested in getting a loan with us? Download our app today and get started!
