online loan app

The Best Online Loan Apps

Published by Captain Cash | Financial | No Comments

Like many things, online loans are moving towards apps. Learn about the best online loan apps and the benefits of using an app to manage your loan.

do payday loans affect credit

Loans: Do Payday Loans Affect Credit?

Published by Captain Cash | Financial | No Comments

Many people have the same question when it comes to credit. And that’s “Do payday loans affect credit?”. Well, considering that it is a loan, the answer in most cases is yes.

In premise, payday loans that are provided by an accredited or recognized institution will be reported on your credit report. Thus, having a negative or positive impact, depending on how you interact with your responsibilities towards the loan.

In this article, we will cover everything you need to know about payday loans affecting credit.

So if you’re financially apt and want to know more, keep reading.

How Does A Payday Loan Work?

Payday loans often go by many names, such as quick cash loans, deferred deposit loans, online payday loans, check advance loans, etc. But they almost always work in the same way. 

To get a payday loan, you need to write a postdated check made to the lender for the entire amount, including the fees. On the other hand, you can allow electronic authorization for access to your chequing account. The lender will give you cash.

The loan is expected to be repaid by your next payday, generally in four weeks, but biweekly arrangements are possible as well. If you don’t pay off the loan plus the fees, the lender can debit your account or cash your check.

Many provinces set a cap on the amount that can be loaned, as well as the fees. Depending on the province, companies might choose to charge $20 for each $100 that you borrow.

Before we get into payday loans affecting your score, we first need to understand the credit report.

The Credit Report

A credit report consists of your past financial history, past loans, your score, repayment history, etc. To understand how your history is, the credit bureau approximates a score based on your financial behavior. The story varies with each bureau, but the higher the score, the better (generally).

The report might contain energy bills, mortgages, cell phone bills, payday loans, as well as negative remarks, such as off charges, late payments, bankruptcy. If you have paid off all of your loans on time, you most likely have a good score.

What Happens to the Report After A Loan Application?

When you apply for a payday loan, the lender will examine your credit report, as well as your score. This will help them determine if you are eligible for the loan.

The loan approval and how much you can get will vary based on the specific information outlined in your credit history. The lender will specifically evaluate the risk of you acquiring the loan, and how likely you are to pay off the balance on time.

Do Payday Loans Affect Credit?

Now that age-old question of “Do payday loans affect credit?” is finally about to be set to rest. There are some cases in which a payday loan can affect the ability to acquire credit in the future.

For instance, when you apply for a mortgage, the lenders will examine your report and notice that you have had payday loans. If you paid them off on time, there’s no issue. But if you have not, they will question your capability to handle financial decisions.

And not all lenders use the same criteria of evaluation. Before you apply, you need to read through the terms, conditions, and mechanisms of the loan. In general, before you take out a payday loan, ensure that you can pay it off and use it temporarily as an aid.

There are plenty of places where you can get a quick cash loan, but only we (CaptainCash) provide the most plausible terms for individuals who want to build their score, not ruin it.

Alternatives to Payday Loans

Payday loans are not for everybody, we understand that. So here are some potential alternatives that you can make use of.

First, if you’re part of a credit union (you can join one), you are able to get low-interest personal loans. Federal unions also provide payday loans. These come up with longer terms, such as 6 months, and have an application fee. The APR never exceeds 28%.

Paycheck Advance

In some provinces, the employer can advance your check with no fees. It’s up to their discretion, so ask human resources about it. You can also make use of fin-tech applications that advance money if you meet the requirements. You will have to research this on your own because we don’t want to provide false expectations for otherwise reasonable opportunities in the realm of financial technology.

Personal Loan

A regular personal loan will come with higher interest, but if you need a loan and don’t qualify for better rates, you need to make use of comparison. You might be able to qualify for longer terms and better rates than those provided by a traditional payday provider.

Look for a loan with lenders who report the financial interactions. A positive history of payments will help build your credit so that you get access to better loans in the future.

Quick Cash for You

Now that you know the answer to the question of “Do payday loans affect credit?”, you are well on your way to employ the use of quick cash and not put yourself deep into financial misery. 

As long as you understand the implications of payday loans, and pay them off appropriately, you can only do good to your credit. If you’re in need of some quick cash with reasonable requirements, get in touch with us and we will happily accommodate your needs.