Emergency Pay Day Loans are they Legit & Safe?
We all get into trouble with our finances from time to time. If you ever found yourself in a similar financial position to what we described, then know that you’re not alone.
With the current global economic slowdown and tight economic conditions in the United States, more people are finding it hard to get by and maintain their financial position throughout the month. Statistics show that most Americans are walking the line when it comes to finances, with almost 60% of Americans saying that they live from paycheck-to-paycheck.
So, what do you do when your finances are in trouble, and you have more month left than money in your bank account? Payday loans offer you a practical solution to your financial problems. By taking out a payday loan, you get instant access to cash within 24-hours, and you can use the money to take care of your financial problems.
The lender doesn’t have any control over how you spend the money, and they don’t ask you what you want the money for when applying for the loan. Therefore, you can use the money any way you see fit. However, you’ll have to pay the loan back with your next paycheck and plan your budget to accommodate the loan expense.
Payday loans offer you a financial lifeline that you can use to get yourself out of money problems. These loans are available for numerous financial services firms, and in most cases, you apply for them online.
This review will take a look at once such lender: Zippyloan, read on for our full review.
What Is Zippyloan?
When applying for a loan, the lender will check your credit score to evaluate your creditworthiness. If the lender rejects your loan application for whatever reason, it reduces your credit score. If you decide to apply with two or three other lenders, you’re likely to get the same result, sue to all of the sudden inquiries on your credit report.
However, Zippyloan saw this consumer problem as a gap in the market, and a way to help consumers get the loans they need. Zippyloan has a partner network of financial services providers ready to issue you the credit you need.
It’s important to note that Zippyloan is not a financial service provider itself. Instead, they act as an intermediary that puts you in contact with lenders that are willing to take the risk of loaning you money.
Zippyloan Application Process
To apply for a Zippyloan, you only need to fill out some basic information on their website. You fill out the amount you’re looking for and then submit your loan request.
Zippyloan processes your application and offers your loan application to interested lenders in its partner network. After sending your loan request, all you need to do is wait for a lender to contact you with a proposal for a loan offer.
The lender pays Zippyloan a commission for referring the business, and you pay off the lender, not Zippyloan, for the money you borrow. Think of Zippyloan is a marketplace where lenders come together to meet borrowers.
All Zippyloan does it present your loan option to these lenders in the marketplace to see if any of them have the risk appetite to loan you money. Zippyloans partner network includes dozens of verified lenders, and you can be sure that you’re dealing with reputable firms vetted by the Zippyloan team.
Unpacking Payday Loans
Payday loans are a practical and effective means of getting access to cash fast. If you’re dealing with an emergency, like the one we described earlier, then there’s no time to wait around for your next paycheck to clear, especially if that’s weeks away.
However, financial lenders know that you’re in a tight spot, and many of them will leverage your unfortunate position to make money off of your misfortune. Payday loans come with high-interest rates that keep revolving as long as the loan is outstanding.
Most people don’t read the fine print or terms and conditions of the loan when signing up with a payday lender. If they did take the time to review this information, they might think twice before submitting a loan application.
Research shows that 12-million Americans use payday loans at least once a year. For those that do take on this type of finance, research shows that taking a payday loan could land you in a downward spiral of debt that you can’t escape. For those Americans who take a payday loan, most of them end up taking another 10-payday loan accounts to cover their expenses while paying back the initial loan.
Borrowers are also unaware of the amount they need to repay. When you’re in a financial emergency, all you can think about is getting access to money. Most people would gladly sign their bank account away if they thought it would get them access to cash fast. Unfortunately, this seems to be the case with people that rely on payday loans every month.
The Danger of Payday Loans
While payday loans are meant to tide you over during a financial emergency, many Americans don’t seem to utilize these loans for that purpose. Instead, most borrowers end up using the loan to cover ordinary monthly expenses, such as the rent and utility bills, and even groceries.
Unfortunately, living this type of financial lifestyle catches up to the borrower. After around a year of taking out revolving payday loans to cover expenses, you’ll find that the money you have to repay in interest payments is no longer sustainable for you to manage.
It’s at this stage that many Americans have no other option left, but to file for Chapter 7 or 13 bankruptcy.
When we look at the maths involved with payday loans, we find that borrowers end up repaying around $30 for every $100 they borrow from a payday lender. This figure doesn’t take into account the fees for borrowing the money either.
In most cases, payday loans require payment within 14-days or as soon as you get your paycheck. In some instances, Zippyloans can connect you with lenders that are willing to issue personal loans with repayment terms of up to 60-months. However, by in large, the majority of payday loans are short-term facilities that require payment in less than a month after the date of the issue.
Payday loans are typically for amounts under $1,000, but the Zippyloan site states that you could be eligible for loans up to as much as $15,000. Many Americans fail to read the terms and conditions of the loan contract, and they also don’t pay attention to the costs of loaning money.
The financial crisis in their lives takes over, and they think that they’ll worry about the fees later. However, if these lenders understood the actual costs involved with the loan, they would probably avoid it in the first place, and look for an alternative financing option.
For example, let’s say you take out a $500 payday loan with Zippyloan, and the fees of facilitating the loan come to $75. Using this model, you repay the lender $575 two weeks later when the loan is due.
In this case, you would be paying an annual percentage interest rate (APR) of 391%, which is far higher than any other loan facility available from financial lenders like banks.
There’s No Guarantee You’ll Get a Loan
Zippyloan has an extensive partner network of financial service providers willing to provide payday loans to the public. However, while most of these lenders will work with anyone that applies, there’s no guarantee that you’ll get a loan if you apply.
Lenders will still assess your credit risk, and if they feel you’re asking for too much money, or you can’t afford the loan, then they might reject your application. Always ensure that you’re loaning an amount that you can afford, and never borrow money if you’re unsure how you will afford to pay it back.
Your Credit Score and Payday Loans
When you apply for a loan with the Zippyloans partner network, the lender will check your credit score to assess your creditworthiness. The United States has three major credit bureaus, Equifax, Experian, and TransUnion. These three bureaus collect information every month from their networks of credit-reporting agents, such as banks and financial lenders.
The bureaus collate this data, assessing your performance in managing your credit in five critical areas. They use this information to create your credit score, on either the FICO or VantageScore system. FICO is the most commonly used credit scoring system, and most lenders will look at your FICO score.
Your credit score determines your creditworthiness, allowing lenders to assess if your risk profile suits a loan. If the lender thinks your credit score is too low, and there’s a chance you could default on your loan, then they will refuse you the facility.
However, if you have a fair to good credit score, then you’ll probably have no issues sourcing credit from payday lenders. Some payday lenders will also make loans to people with bad credit as well, so don’t think that because your credit score is low, that this automatically disqualifies you from payday loans.
If you have bad credit, the lender will likely increase the APR on offer with your credit facility.
The annual percentage rate describes the interest rate that the lender attaches to your loan facility. If you take out a mortgage, it’s common to get interest rates as low as 4.5%. However, if you want a credit card, the APR on the facility can be anything between 16 to 25%, depending on your credit score.
Lenders cover risk in loaning you money by increasing the APR. Lenders believe that by charging you a higher interest rate, you’ll pay off the account first, before your other creditors. The cost of loaning money eats into your monthly budget, and the high APR incentivizes you to pay down the debt as soon as possible.
However, in reality, consumers in financial distress don’t give a second thought to the APR in most circumstances. Instead, they focus on getting the cash and then worry about paying it off later. This haphazard financial practice winds up getting them deep into a revolving debt with the creditor, which often results in financial distress and bankruptcy of the affected consumer.
When applying for your credit facility with the Zippyloans partner network, makes sure you review the APR on offer from the lender and make sure you understand the cost of loaning the funds. If you know the details, you might think twice before taking a loan.
How the Credit Bureaus Calculate Your Credit Score
The credit bureaus calculate your credit score using a basket of five weighted factors to determine your eligibility for the loan. The bureaus collect the following information from credit reporting agents each month to determine and adjust your credit score to your current financial position.
These five factors determining your credit score are the following;
- Your payment history – Every time you make or miss a payment, the bank or lender reports your activity to the credit bureau. If you consistently pay your bills late, then it will adversely affect your credit score.
- Your total outstanding credit – How much credit do you own, and what’s the oldest credit account you have?
- Your credit mix – Do you have a diverse mix of credit? Mortgages, car loans, student loans, credit cards, the more you have, the better.
- Your credit utilization ratio – Lenders don’t like to see you using more than 30% of the credit available to you. If your credit card has a $1,000 limit, it’s best to keep it under $300 outstanding to avoid the bureau penalizing your credit score.
- Hard inquiries on your account – Every time you apply for a credit facility, the lender checks your credit report and credit score. The bureaus take this as a sign of you looking for multiple credit accounts and temporarily drop your credit score.
Therefore, if you try to apply for three payday loans with lenders, its likely to lower your score, and the lender may refuse your application.
Applying with Zippyloan
As mentioned, Zippyloan is not a financial lender; they only connect you with financial services providers in its partner network.
As a result, you’re not applying with a lender, but rather filling out a questionnaire that lenders use to qualify you for a loan. When you take out the loan, you’re not going to pay Zippyloan back the money you owe. Instead, you’re paying back the financial services provider that initiated the loan with you.
When applying for a loan on the Zippyloan site, the system will prompt you to complete a questionnaire that lenders use to qualify you for a loan.
The information you’ll need to disclose includes;
- Your name.
- Your date of birth.
- Your Social Security number
- Your driver’s license number.
- Cellphone number.
- The loan amount.
- The details of your employer.
- Other contact information.
- The purpose of the loan.
- Your bank account details.
After completing your questionnaire, Zippyloan sends the information to its partner network of lenders, and you should receive a response to your loan request within 24-hours. In some cases, you could receive an answer in minutes or hours.
If you receive approval for your loan, then the lender automatically deposits the requested funds into your bank account within 24-hours, giving you fast access to cash.
Zippyloan Rates & Fees
Repayment terms on personal loans are generally either monthly or once every two weeks, depending either on your preferences or your lender’s terms.
While specific terms of personal loans will vary depending on your state, lender and your specific circumstances, below is a general range of common terms.
- Loan amount: $300 – $15,000
- Lending period: 6 – 72 months
- Payment frequency: Once a month or twice a month
- APR: Will vary based on your credit score, repayment history and other factors
- Prepayment penalty: None
Zippyloans Aren’t Available in Every State
It’s important to note that certain states don’t allow you to use Zippyloans. If you live in Washington, D.C, Oregon, New York, or West Virginia, then state legislature prevents you from using Zippyloans to access a payday loan.
What Happens If You Don’t Repay Your Zippyloan?
Never loan money that you can’t afford to repay. If you default on a loan with a lender, then it’s going to affect your credit score adversely.
As mentioned, the credit bureaus receive reporting from credit agents every month. If a lender reports you as a late payer or defaulting on your account, then the bureau will lower your credit score, making it more challenging for you to secure credit lines in the future.
Your credit score plays a significant role in your life. With a bad credit score, you might struggle to find an apartment to lease, you’ll find it challenging to receive reasonable insurance rates, and you can forget about applying for a mortgage or car loan.
Alternative Finance Options
If taking out a payday loan sounds like an expensive option, then there are a few other alternatives you can use to get access to the cash you need.
If you have a good credit score, then consider applying for a second credit card to give you more room with managing your finances. While credit cards do have an APR that can be as high as 25%, it pales in comparison to the potential 391% APR on offer from payday lenders.
- Avant also offers customers unsecured loans with APR of up to 35.99%. Avant also accepts lenders who have fair credit as well, but you might have to pay a higher APR. Avant also won’t charge you a penalty for paying off your loan account early.
- OneMain Financial is another example of a lender that works with clients who have fair credit scores.
In Closing – Key Takeaways
Zippyloans is a solid platform connecting borrowers with lenders in the payday loan market. Zippyloan itself is not a lender, but it has a partner network of financial services providers willing to provide the public with payday loans.
Zippyloans acts as an intermediary and receives a commission for the lender for giving them your business. Financial lenders work with Zippyloan to improve the qualifying process. By working with Zippyloan, you don’t have numerous credit providers downloading your credit report, saving your credit score from a downgrade.
At the same time, lenders get to rely on the Zippyloan qualifying process to mitigate the risk in lending the consumer market money. So far, the system is working well, and many Americans utilize Zippyloan for sourcing a payday loan to meet their financial needs.
However, taking on payday loans is an expensive way to loan money. If you can afford to find loans from other avenues, we suggest you take them. Payday loans come with notoriously high APR and can end up trapping you in a vicious downward spiral of debt that eventually results in your filing for bankruptcy.
You must understand the terms and conditions of the loan before accepting the agreement. Ensure that you repay the loan as quickly as possible, and avoid taking on concurrent loans to cover your budget the following month. Those Americans that choose to pay a minimum balance on their loan might end up paying more than 390% in APR charges on outstanding balances.
Payday loans are there to help you out of a sticky financial situation. However, many Americans use these loans to cover general household expenses, and then wonder why they end up going bankrupt a year later. Be prudent with your financial decisions, and only use payday loans when they are necessary.
However, the Zippyloan site works well, and we think that’s it’s one of the best ways of applying for a payday loan on the internet. The process is fast and efficient., and you’ll get a provider to meet your needs in the majority of cases.