Are you shopping around for instant loans? Do you need a way to pay back your loans in a flexible way? That can be tough, and often people are swayed towards payday loans disguised as instant loans. But beware, instant loans like payday loans have their drawbacks.
What are instant loans?
Instant loans go by many names: payday loans, cash advances, and more. But they are all essentially the same thing. Instant payday loans are easy-to-get loans that are usually for a couple of hundred dollars.
Unlike a personal loan, very little information goes into the approval process. You can get money in minutes. But beware of some of the practices that can lead to a cycle of debt. We’ll break it down more below.
How do instant loans work?
Instant loans can be expensive, and they usually come with short repayment terms, which isn’t in your best interest. Let’s walk through a scenario that will help you understand how instant loans work.
Let’s say you need $400 for an emergency car repair. The payday loan lender offers you a two-week loan that includes a fee of $15 per $100 that you borrow, resulting in a total loan amount of $460.
You agree to pay the $460 within the next two weeks, including the $60 in interest. You will write a check for $460 and date it for two weeks in the future. Ideally, in two weeks, you’ll pay off the payday loan.
But what happens if you can’t repay the loan? Well, the payday lender will create a rollover loan. So, not only will you have to pay back the loan of $460 but you’ll also have to pay back the newly-added interest as well.
This is why instant loans often get labeled as predatory. They can create a cycle of debt that is very difficult to escape. You could get stuck with rollovers time and time again, all because the repayment terms are so brief. Those additional costs really add up over time, which contributes to the debt cycle.
Who can get an instant loan?
Anyone can get an instant loan, which is another reason why these instant payday loans are so predatory. Payday loan lenders will lend money to people even when instant loans are not a good idea for them.
So, it’s important to look out for yourself and understand the fine print before taking on an instant loan. Just because you have been approved does not mean it’s the best financial decision for you.
But just so you’re aware, here are the basic qualifications for most instant loans!
- You must be eighteen years old or older.
- You must have proof of income, like pay stubs.
- You must have an active bank account in your name.
- You must have a government-issued state ID.
How can I get emergency money fast?
Life is full of emergencies, and they come at you fast. Plan for this by establishing an emergency fund. Set aside money each month for a rainy day. You will be surprised by how quickly the funds can stack up. Plus, it’s one of the most significant ways to prevent yourself from falling into the cycle of debt that so many families struggle with when hard times hit.
Don’t have an emergency fund? MoneyLion can help! Our Safety Net feature is designed to support you when life throws a curveball your way in the form of unexpected expenses. Safety Net will help you build an emergency fund and give you access to cash advances if you don’t have enough money in your emergency fund to cover an unexpected expense.
Do instant loans affect your credit score?
If you’re paying off your instant loan, then the loan itself won’t negatively affect your credit score. But if you struggle to pay off your loan, it can start to negatively affect your credit score!
Most payday lenders don’t report on-time payments. So, you won’t reap any benefits from a payday loan in terms of your credit score. Missing your payment will also negatively affect your credit score because missed payments will be reported to the three major credit bureaus.
If enough missed payments transpire, you can get sent to collections. This will impact your credit score in a negative way because getting sent to collections appears on your credit report.
Should I take out an instant loan?
Instant loans can be risky, particularly when they are not repaid within the repayment term. Instead of an instant loan, consider taking out a MoneyLion Credit Builder loan. Our Credit Builder program doesn’t come with a hard credit check. Plus, you’ll gain access to $1,000 in loans and same-day funding, which can help you build your credit score!
Where should you apply for an instant loan?
Instead of seeking out instant loans that are predatory, turn to MoneyLion. We have you covered. Let’s take a look at some of your options.
Credit Builder Loan
We recommend that you start with a Credit Builder loan from MoneyLion. It’s simple to apply for and you can obtain a loan of up to $1,000. You’ll pay off the loan every month, and in response, we’ll report the good news to the major credit reporting bureaus.
Your score will steadily climb over the course of the repayment process. Once you pay off the loan within twelve months, you’ll see your credit score increase. From there, you’ll receive the remaining loan funds. This option has so many benefits rolled into one program! Get started today.
Instacash
Need money faster? MoneyLion’s Instacash program can give you access to $250 right away. There are no hard credit checks, and the approval process is typically completed the same day you apply. Try Instacash today to get your money fast.
Overtime
Forget other buy-now-pay-later apps, like Klarna! Pay Later (coming soon) by MoneyLion is the best way to buy the things you need most when you need them most.
Instead of taking out loans, Pay Later (coming soon) makes it possible for you to spread out your payments over the course of four interest-free installment payments. It’s the easiest way to make purchases when you don’t have the money upfront. Sign up for the Pay Later waitlist today.
Early payday
Do you need money now? Get paid early with MoneyLion. Our early payday feature lets you borrow money before your paycheck arrives, which means you’ll get to avoid paying interest on a loan. Get your paycheck up to two days early with MoneyLion!
Get money fast, on your terms
Sometimes, you’ll find yourself in a position where you need money quickly for big things in life. But don’t rush into an instant loan that can hurt you in the long run. Instead, opt for a Credit Builder loan from MoneyLion for faster funding at a lower cost. Try it out today.
FAQs
Where can I borrow money ASAP?
Try MoneyLion’s Instacash program for up to $250 instantly.
What app lends money instantly?
MoneyLion has several ways to get money instantly. Try our Credit Builder program for up to $1,000.
Are payday loans instant?
Yes. But these loans often are expensive and create more debt in the long run.
Disclosure
MoneyLion Pay Later loans issued by WebBank. A soft credit pull will be conducted which has no impact on your credit score. MoneyLion Pay Later loans have an annual percentage rate (APR) ranging from 19.99% – 35.99%. Terms and conditions apply.
