Payday loans with guaranteed approval seem appealing when you need fast cash. These short-term, high-interest loans promise easy qualifying and next day funding, without credit checks. But there are some important facts to know before applying. This guide will cover the top 10 things everyone should understand before seeking guaranteed approval on payday loans.
What Are Guaranteed Approval Payday Loans?
Guaranteed or “no denial” payday loans are small cash advances designed to bridge an income shortfall until your next paycheck. Rather than requiring good credit, payday lenders evaluate your income, existing debts, and banking history to make lending decisions.
Approval and funding is promised in as fast as one business day for those who qualify. Lenders advertise “guaranteed” or “no credit check” approval to attract borrowers in need of fast cash loans. But there are key facts you must know first.
- High Interest Rates and Fees
Guaranteed approval comes with a steep price. Payday loans carry very high interest rates and fees, especially compared to alternatives like credit cards. It is common for payday loans to have 400-800% APR interest rates.
All fees for origination, documentation, late payments, and non-sufficient funds should be clearly disclosed by lenders before borrowing. Never assume a payday loan is your cheapest option, even with guaranteed instant approval.
- Very Short Repayment Term
Payday loans require full repayment by your next paycheck, usually within 14 days. Some lenders allow up to 30 days. But the short repayment term often leads borrowers to take out new loans to pay off old ones.
This debt cycle is easy to fall into with guaranteed approval payday loans. Make sure your budget allows complete repayment without needing to re-borrow the same funds again right after.
- Potential for Additional Fees and Charges
Beyond the high interest, payday lenders may charge fees for:
- Origination or documentation
- Late payments
- Unsuccessful payments or non-sufficient funds (NSF)
- Renewing, extending, or rolling over loan principal
These fees can multiply quickly. Know all the costs involved before borrowing to avoid surprises.
- Credit Impacts are Possible
Payday lenders normally do not perform hard credit checks from the major bureaus. However, if you default with non-payment, the lender may send your account to collections which does show up on your credit report.
Your bank may also charge NSF fees for failed auto-debit attempts, averaging $30 per try. Avoid potential credit impacts by only borrowing what you can realistically repay.
- Requires Proof of Income
To qualify for guaranteed approval, you must provide proof of income. This usually involves submitting pay stubs, direct deposit receipts, or bank statements showing regular deposits.
Self-employed individuals may need to provide profit/loss statements or tax returns. Make sure you have these items available before starting your application.
- Full Direct Deposit Required
Lenders want assurance you can repay the loan. So despite guaranteed approval, they often require that you have consistent payroll or benefits deposited directly into your checking account.
Having a portion of your income deposited elsewhere may disqualify you from guaranteed approval. Be prepared to show full direct deposit.
- Fronts Your Next Paycheck
Payday loans essentially give you an advance on expected income. This means you are borrowing against money you have not received yet.
While approval may be guaranteed, fronting your next paycheck via a high interest loan should be a last resort option when facing an emergency. Understand it reduces what you’ll have to live on for your next pay cycle.
- Beware of Fraud and Scams
Unfortunately, some predatory lenders falsely advertise guaranteed approvals on payday loans. But hidden fees or impossible repayment terms in the fine print trap borrowers in spiraling debt.
Steer clear of lenders who won’t fully disclose all loan terms up front or try to lure you with misleading claims. There are reputable payday lenders, but scams do exist.
- Can Lead to Long-Term Debt Cycles
Because repayment is due quickly, many borrowers get stuck having to renew or re-borrow the same payday loan. The Consumer Financial Protection Bureau found over 80% of payday loans were rolled over or followed by another loan within 14 days.
While guaranteed approval is easy, breaking the debt cycle is difficult. Understand the short repayment terms before assuming this type of loan is manageable.
- Alternatives May Be Available
Guaranteed payday loans should not be your first option. Explore alternatives like borrowing from family and friends, credit card cash advances, traditional bank loans, or employer advances first.
While approval is not guaranteed, these options provide lower interest rates and longer repayment terms in most cases. Avoid payday loans unless no other choices exist.
Now that you know the key facts about guaranteed approval payday loans, you can make an informed decision on how to address your short-term cash needs. Consider both the quick pros and costly cons before moving forward.
Questions to Ask Yourself Before Borrowing
Now that you understand the basics of guaranteed payday loans, here are some key questions to reflect on before submitting an application:
- Is this loan absolutely necessary right now?
- Can I prove steady income to qualify and repay on time?
- Do I know all the fees, rates, and repayment terms?
- Can I afford repayment in full by my next paycheck?
- Have I explored lower interest alternatives first?
- Am I borrowing more than I realistically require?
- Can I avoid rolling this loan over into a new one?
- Am I dealing with a legitimate, reputable lender?
- What happens if I default and can’t repay on time?
Having firm answers to these questions will ensure you make the right financial decision and borrow safely. Instant approval payday loans can provide fast relief but require caution.
What to Do if Denied for a Payday Loan
Despite guarantees of approval, your payday loan application can still be denied. Common reasons for denial include:
- Insufficient or irregular income
- Lack of full direct deposit
- Pending bankruptcy
- Recent multiple payday loan applications
- Default history with same lender
If denied by one payday lender, others may still approve you. However, focus on addressing why you were denied first. This may require improving your credit score, finding a co-signer, or demonstrating stable income over the last few pay cycles.
Make sure to choose legitimate payday lenders, never pay upfront fees, and avoid lenders who won’t disclose full terms. Finding the right payday loan fit may require some trial and error.
When Payday Loans Make Sense
While payday loans can be risky, there are some scenarios where they may be appropriate when used carefully:
- Emergency repairs like medical bills or car fixes
- Final expenses due before paycheck
- Avoiding late fees and penalties on other bills
- Required up-front deposits you can repay quickly
The most responsible uses involve one-time expenses and life emergencies that payday loan funds can resolve or mitigate. However, reliance on payday loans for recurring costs or credit card debt is unwise. Avoid if possible.
How to Borrow Responsibly and Minimize Risks
If you determine a payday loan is your best option, borrow carefully:
- Shop lenders to compare all fees and APR interest rates
- Borrow only the minimum amount required
- Have a firm plan to pay it off in-full on your next paydate
- Mark payment due dates in your calendar and budget
- Be prepared for the high APR interest expense
- Never borrow more than one payday loan at once
- Avoid unrealistic promises of very fast cash with no credit checks
Following these rules will minimize risks and ensure payday loans remain a short-term relief option rather than long-term debt trap.
Now you are armed with the top 10 things everyone must know before applying for guaranteed approval payday loans. While quick cash is promised, high costs and short repayment periods make payday lending a risky territory to navigate. Consider all your options, borrow minimally, and use strategically only as a last resort if alternatives are not available.