Same Day Loans: How They Work & Who Can Get One

Chang Fu
December 17, 2019

Same day loans are loans where you get the cash you borrow the same day you apply. Many lenders and lending companies claim to be able to get you cash the same day you request it, but be careful – the convenience can come at a cost and the funding might not be on the same day!

For example, many personal loans use ACH (automated clearing house) to deposit the funds into your bank account. The ACH process can take one business day to three business days so even if you get approved on the same day as you requested the loan, you might not receive the funds until three business days later – when you don’t need the money anymore.

Same day loans are also referred to as emergency loans or same day payday loans. Why would someone need money that fast? Maybe you’ve lost your job, need your car fixed, or rent is due tomorrow. Many of us have been in urgent situations where cash is needed immediately.

What if I have bad credit or no credit score?

Even with bad credit, you may qualify for certain same day loans such as payday loans, online title loans, and secured loans. However, if you don’t want a credit check at all, no credit check loans may be the right option for you.

Depending on which lender you use for your same day loan, your credit score and credit history can have an impact on whether you get approved on your application for a same day loan. For personal loans, you’ll usually need credit scores of 600 or above. A personal loan is money borrowed from a bank, credit union, or other lender that is repaid in installments in 2 to 5 years and usually between 6% and 36% annual percentage rate of interest (APR). It can have specific qualification criteria and is significantly harder to qualify for than a payday loan, cash advance, or other secured loans.

For payday loans and alternatives to payday loans online, your credit score and credit history may not matter at all. Payday lenders usually require proof of income, state-issued ID, and an active bank account as part of the loan application. So even if you have a less-than-perfect credit score or even no credit history at all, you may still get the money you need. With a loan from Possible (a type of online installment loan), you can get money in minutes even with bad credit, repay in multiple installments, and build credit history.

How can I receive the money same day?

There are a few ways you can receive money from a same-day loan immediately or almost immediately, like within an hour:

  • Receive cash. Payday lenders and other lending companies that have a storefront can disburse money to you in the form of cash. There may be additional requirements or restrictions to allow for receiving money in the form of cash on the same business day.
  • Receive money on your eligible debit card. With a debit card, both storefront and online lenders can put money directly on your debit card. Expect to receive funds after your same-day loan request in a few minutes. Some lenders may charge fees to instantly disburse funds to your debit card so check the fine print. There are no fees to disburse money to an eligible debit card when getting a same-day loan from Possible.
  • Bank wires and wire transfers. A common type of money transfer is through bank wires and wire transfers, and same-day options are available. It usually takes several hours for the receiving bank to show that the wire proceeds are in the recipient’s savings or checking account, even if the money has already been sent.
  • Instant or same-day ACH transfers. Some financial institutions and lenders make same-day ACH transfers available. This requires a three-times-a-day settlement schedule (the bank must offer this) and the bank must support the ability to process outstanding requests three times a day. For example, you can get approved for a loan early in the morning and a funding transaction is sent by 9:30 AM. With a same-day ACH transfer, the request should be processed by 1 PM on the same day.

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Types of Same Day Loans

  • Payday loan. A payday loan or cash advance is a short-term unsecured loan usually repaid on your next payday. To apply for a payday loan, most loan providers require proof of income, an active bank account, and state-issued ID and you’ll need to sign a loan agreement. Most payday loans have same-day funding options including cash if it’s a storefront lender or on debit card if it’s an online payday lender. Because the annual percentage rate of interest (APR) for which payday loans average around 400%, only use a payday loan when it’s the best option for you. Some payday lenders also lend out online installment loans which are similar but repayment is over multiple pay periods.
  • Possible loan. Possible offers mobile-only installment loans that are repaid over time and builds credit history. You don’t need good credit and you can apply, get approved, and receive money in minutes on your eligible debit card or in 1-2 days in your bank account. Repay the loan in multiple installments and build credit history – Possible reports bi-monthly payments to all three credit bureaus: Experian, TransUnion, and Equifax. A Possible loan has an APR of 150-200% depending on state, much cheaper than traditional payday loans online or with storefronts, bank overdraft fees, and payday advance apps that require membership fees and/or tips.
  • Title loan. A car title loan, also called a “pink-slip” loan, title pledge, or title pawn is a short term secured loan using your car as the collateral. If you cannot repay the loan, the lender will seize your car. Title loans tend to have triple digit interest rates and are for 15-30 days. The loan amounts tend to be 25-50% of the car value. Be careful about additional fees and add-on costs on title loans like a vehicle roadside service plan and roll-over fees. Roll-over costs and fees can happen when you can’t pay off the loan during the typical term of the loan and the lender may offer to roll over your title loan into a new loan.
  • Pawn shop loan. To get a pawn loan, you go to a pawn shop with personal property with resale value. You leave the personal possession as collateral, the pawn shop assesses the value (usually 25-60% of resale value) of your personal property, and gives you a loan. APRs are usually around 200% and to receive your personal property left as collateral back, you’ll need to pay off your loan with principal, interest, and additional fees within the agreed-upon time, usually 30 days. Pawn loans don’t require a credit check or bank account and you can receive money in the form of cash.

Alternatives to Same Day Loans

  • Credit card. A credit card lets you spend money on credit. You are borrowing money from a bank to make purchases. Credit card annual percentage rate of interest (APRs) are under 36% but there are specific credit score and other requirements for you to apply and get approved for a credit card.
  • Payday advance app. A payday advance app like Earnin, Dave, or Brigit will advance you cash in advance of your payday from your employer. However, you’ll need a steady job, a smartphone with location tracking, and an active eligible bank account to get the payday advance. In addition, watch out for membership fees, subscription fees, tips, and instant transfer fees on a payday advance app that can add up. Although these fees are not quoted in the form of an APR, the APR can be higher than payday loans and other borrowing options and payday advance apps don’t follow state and federal lending laws.
  • Personal loan. A personal loan is an unsecured fixed rate loan usually repaid in monthly installments over a specific term – for example, 3 years. Interest rates and whether you can qualify will vary by lender, your credit score and credit history, and your debt-to-income ratio. Usually APRs are lower than 36% but there can be an origination fee. You can get a personal loan from many major banks, credit unions, and online lenders. However, it takes more than a day on average or even up to a few weeks to receive money on a personal loan.
  • Student loan. A student loan is a type of loan designed to help students with financial costs of post-secondary education. The interest is substantially lower than other loans and the repayment may be deferred until the student has finished school. There are two main types – federal student loans and private student loans.
  • Payday alternative loan. A payday alternative loan, also called PAL, is a short term unsecured loan offered by some credit unions. PALs have lower fees than payday loans and there are restrictions on how many of these payday alternative loans a borrower can take out in a 6 month period. Loan amounts are $200 to $1,000 and repayment terms are one to six months. Because the APR is much lower on a PAL, loan offers are contingent on being a member of the credit union and demonstrating basic financial qualifications such no recent bankruptcy.
  • Friends or family. Although it can be embarrassing to borrow money from friends and family, this could be the best option to make sure you do not fall into a vicious debt cycle of borrowing money, rolling-over debt, and using more traditional loans to repay existing debt. Ask your close family members or friends whether you can borrow some money from them. Agree on a repayment plan and term that works for all parties and signing a written document might soothe long-term implications on the relationship. Especially if you can’t pay your family member or friend back.
  • Selling personal assets. With online consignment stores and other online resale options such as eBay and Craigslist, you may have valuable personal assets you can convert into money for cash needs. If you can sell your personal assets quickly, you may be able to receive cash same-day or in a few days, depending on what venue you are selling your assets on.

Benefits and Risks of Same Day Loans

Benefits

  • You will receive the money you need immediately. Some emergency expenses such as car repairs, medical bills, or childcare expenses just can’t wait. Having money today when you actually need it and boosting your short-term financial situation can at times outweigh any costs associated with it. And with Possible, you won’t even need to leave your house!
  • Qualifying for same day loans can be easier than credit cards, personal loans, and other alternatives. Because a payday loan, title loan, or other alternatives doesn’t require good credit and in some cases, not even an active bank account, same day loans can be easier to qualify for. With Possible, applying only takes an active online bank account, state-issued ID, and a smartphone.
  • Personal and payday loans are unsecured loans. There’s no chance you’ll lose your house or car if you default on your loan.

Risks

  • Costs are higher than other loans. Annual percentage rate of interest (APRs) are easily over 100% and many times, even 300-600%. Also be aware of fees and additional costs associated with same-day loans online or in a storefront such as an instant transfer fee, often charged for funding money directly to a debit card.
  • Not paying back the same-day loan could reduce your credit score. Although some payday loan lenders don’t report repayments to credit bureaus, not paying back a loan can hurt your credit history. There are alternative credit bureaus that have credit reports and monitor whether you have outstanding payday loan, cash advance loans, or other debt. With Possible, you’ll get the benefit of on-time payments which will build positive credit history.

Chang Fu

Chang is an avid writer, among other things, at Possible. He grew up loving reading and writing, creating his own poems and even a book he's now hidden in an old closet, unpublished. His financial experience at a large bank along with his passion for technology to help underserved communities inspires him to write for Possible.

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