If you know where to look, you can likely find multiple establishments willing to offer you a same day loan. You may have even been tempted to take one of these loans out in the past. But these loans can often be predatory, with high interest rates and strict conditions attached.
Is it ever worth taking out a same day loan? And if so, what should you look for when getting one?
The first thing you need to know is that not all same day loans are created equal. Some same day loans are called payday loans because they’re usually given with the expectation that the loan will be paid back using your next paycheck. But regardless of the conditions or terms, most same day loans carry extensive restrictions, making it harder for you to pay off your balance or presenting other complications.
That said, it is possible to find same day loans with neutral or favorable conditions. For example, if you have a pending lawsuit, you can usually find a settlement loan that pays cash same day but doesn’t have high interest rates or high fees.
What, exactly, is the problem with same day loans?
On the surface, same day loans seem to have a lot of advantages. They are:
- Convenient. Just about anyone can qualify for a same day loan with certain establishments. Lenders are willing to accept you as a customer no matter what your credit score is, how much other debt you have, or what your financial history has been like. That means even the least fiscally responsible can often qualify for this type of loan.
- Immediate. Getting the proceeds from the loan is often immediate. You don’t have to wait days or weeks for your loan application to process; you can often walk out of the business with cash in hand. This immediacy is a blessing for many people scrambling to get money together.
- Easy. It’s also usually very easy to take out a same day loan. These businesses make money by issuing loans, so they’re eager to make the process a snap for new customers.
There’s no such thing as a free lunch. All these advantages come with extra costs and disadvantages. No same day loan business would be able to stay in business if they issued loans so quickly and easily without some sort of extra way to generate revenue.
That’s why most same day loans are associated with:
- High interest rates. The most common feature of a same day loan is a high interest rate. The exact interest rate and the way it is compounded will vary from institution to institution, but one thing is certain: if you take out a loan with a high interest rate and you don’t pay off the balance quickly, your principal due will quickly multiply.
- Hidden fees. Some institutions also have hidden fees or excessive fees that completely compromise the value of the loan. The lender might be willing to lend you $100, but they’ll charge you $35 in fees to get that loan, and you might owe additional fees if you don’t pay in the correct time frame or in the correct way. This makes it easy for people to get in over their heads.
- Predatory conditions. On top of that, many same day lenders are predatory, intentionally trying to exploit people rather than connecting them with resources they need. They may mislead you, intentionally mask their fees, or use aggressive sales tactics to get you to sign up for the loan.
Are there any alternatives to same day loans?
- Certain types of advances. Some types of advances connect you with resources immediately without the need for high fees or high interest rates, such as settlement advances for pending lawsuits. Because these are truly advances, and not just loans, you may face it very reasonable fees.
- Raising cash. You can also raise cash for your short-term needs. Sell some of your possessions that you don’t need or hit up friends and family members if you just need to cover some expenses before your next payday.
- Credit cards. Credit cards aren’t great for your long-term financial wellness if you use them often, but as a short term fix, they’re generally more reliable than same day loans. Just be sure you understand the interest rate, the terms, and the conditions before using your credit card.
- Personal loans. Even some personal loans have more favorable conditions than same day loans, though it may take some time to get approved.
Same day loans aren’t inherently bad, nor are all same day loans on par with the predatory loans associated with typical payday lending. However, there are extra costs for the convenience and immediacy of a same day loan.
If you have an immediate need for cash, consider taking an alternative route to cover your expenses.