Payday loans are a form of short-term credit. Also called a cash advance, there isn’t a set definition of a payday loan, but they are usually $500 or less and repaid with a single payment on your next payday. They are often used to get additional cash when an urgent situation arises, like covering an unexpected bill or paying rent.
These loans are available from lenders in brick-and-mortar stores and from online businesses. Different lenders offer different rates and options, and some companies, like Possible, are significantly different from traditional payday loans due to repayment flexibility, the ability to build credit, and other options. This brief guide will cover applying for a payday loan, repayment, and different types of loan options that are available.
Annual Interest Rate and Fees
Payday lenders typically charge a percentage or dollar amount per $100 borrowed. The amount of the fee can vary from $10 to $30 for every $100 borrowed, depending on state laws and the maximum amount a state permits. The most common fee is $15 per $100. For a two-week loan, the $15 per $100 borrowed converts to about 400% annual interest (APR).
Depending on the loan term and the fee, some payday loans can be as high as 700% or 800% annual interest (APR). According to research from the Consumer Financial Protection Bureau (CFPB), the median online payday loan costs $23.53 per $100 borrowed which is a 613% APR. These rates are all significantly higher than loans from Possible which are between 150% and 200% APR.
Minimum Credit Score Required
Good news! There is no minimum requirement for a credit score. That means even if you have a bad credit score, you can still apply for a Possible payday loan.
Offered Loan Amount
The offered loan amount for a Possible payday loan is up to $500. That’s right, you can get the cash you need without jumping through a bunch of hoops.
There are some basic requirements you should fulfill before taking a bad credit loan. Here is the list:
- You should be at least 18 years old
- You must have a valid ID proof or social security number
- You must be a United States citizen or a permanent resident
- You must have a valid active US bank checking account
- You have to provide a valid email address and a phone number
- There must be some income deposited into your bank account.
- Valid identity proof
- Valid current mobile number and email address
- An active American bank account
- Social security number
Differences in repayment terms between traditional payday lenders and Possible have a big impact on consumers. Payday lenders require customers to repay their loans in one lump-sum payment on their next payday (typically 2 weeks after taking out the loan). This can be really hard on borrowers, in fact, the CFPB has found that more than 80 percent of payday loans are rolled over or renewed within two weeks contributing to a dangerous debt cycle.
Possible offers an installment loan, made up of 4 equally divided payments to be paid over 8 weeks. Possible also allows its customers a 30-day grace period, the ability to update payment dates in the app if needed, and alternative payment methods, like sending in money orders, for customers who are going through difficult times and cannot afford to have their accounts go into overdraft. Possible does not charge fees for late payments.
Possible Payday Loan Example
Let’s say you’re a Washington resident who needs some extra cash to cover an unexpected expense. You decide to apply for a $200 loan from Possible Finance through their app. With a repayment period of 8 weeks, you will have 4 total payments of $57.50 each, resulting in a total repayment of $230. This equates to a 151% APR, which is significantly lower than traditional payday lenders and payday loan alternatives.
To put things into perspective, bank overdraft fees can equate to a whopping 17,000% APR! Suggested tips on payday advance apps can amount to a 730% APR! And typical payday loan APRs can reach up to 390%.
How to Apply for a Possible Payday Loan
So, you’re interested in a Possible Payday Loan? Applying is quick and easy. Here’s how:
- Download the Possible app from the iOS app store or Google Play Store.
- Sign in through the app and apply for a loan. You’ll need to connect your bank account and verify your identity.
- Within 24 hours, you’ll be notified whether you’re approved for a loan.
- Sign the loan agreement and choose how you want to receive your funds.
- Repay over time and start building your credit!
Possible Finance offers a unique and more flexible approach to payday loans. With lower APRs, installment payments, and alternative payment methods, customers can avoid the cycle of debt that is often associated with traditional payday loans. Plus, by repaying on time, you can start building your credit score and achieve financial stability.
However, it’s important to remember that payday loans should only be used as a last resort and should be paid off as soon as possible to avoid additional fees and interest charges. If you’re struggling with debt, consider seeking advice from a financial professional.
Editorial Note: MakeHelpOf does not receive any commission from any website or third-party advertisers. This is just a review article based on consumers’ experiences from the internet. It’s accurate to the best of our knowledge when it’s posted. Please read all the information carefully before you make any decision.