What Is a Same-Day Loan?

A same-day loan is a loan that delivers funds typically within 24 hours. These loans are expensive and should be used only as a last resort. They are often used to provide financial relief for emergencies, for example, an unexpected medical expense or if your car breaks down.

Read on to understand what a same-day loan is, how it works, under what circumstances you should consider using one, and what alternatives may be available.

What Is a Same-Day Loan and How Does It Work?

Same-day loans, also called emergency loans or payday loans, offer immediate relief to borrowers in the event they need cash quickly. Borrowers typically fill out a quick application with an online bank, traditional bank, or credit union, and funds are paid into their bank accounts often within 24 hours. Online lenders will provide funds quicker than traditional banks and credit unions.

Some banks require a minimum credit score of 560 to 660, but many don't. Because of the low bar for loan qualification, lenders charge high interest rates and fees to cover the cost of their risk.

Same-day loans also tend to have short terms, weeks or months as opposed to years, and the loan amounts are usually smaller than the amounts for personal loans. A same-day loan is not recommended if you can qualify for a traditional personal loan or another type of financing.

Some people are unable to pay off same-day loans promptly, and the high interest rates and fees add up, creating spiraling debt. In some cases, the amount owed is taken directly out of your bank account, even if you have insufficient funds to cover the withdrawal.

That said, these loans can provide immediate financial relief if you cannot obtain a traditional loan or need money for an unexpected emergency.

What are the Different Types of Same-Day Loans?

There are different types of loans that offer immediate financing. Examples are payday loans, title loans, pawn shop loans, and credit card cash advances.

Payday Loans

Payday loans are designed to offer financial relief for borrowers until their next paycheck, so they are often for small amounts (less than $1,000), and repayment is typically due within about two weeks. The borrower will owe the amount borrowed plus interest and fees.

The lender may not require a hard credit check, but they will charge a high APR (annual interest rate) and fees because a borrower could be at a high risk of defaulting on the loan. A loan charge of between $10 and $30 is not uncommon for every $100 borrowed, which adds up to a 400% APR. Compare that to the average APR for a personal loan, which, according to Experian, is around 10%.^[1]

Loans can be rolled over for another two weeks, but there will be an additional fee for doing so called a rollover charge. There will also be additional interest and fees. Thus, it can be hard for borrowers to pay off the mounting debt.

The application for a payday loan with same-day funding is quick and easy, and the lender will likely ask for your bank account details so that they can deposit the funds.

Title Loans

Online title loans are similar to payday loans in that they are typically short-term (15 to 30 days) and for amounts between 25% and 50% of the car's value. However, these loans require collateral, such as the title of your car. If the borrower cannot pay off the loan, the lender assumes ownership of the collateral.

According to the Federal Trade Commission, APRs for title loans may be around 300%, and financing fees are typically 25% per month.^[2]

Before choosing this type of loan, borrowers should consider whether they can pay off the loan in time because losing a car or other collateral asset could exacerbate their financial situation.

Pawn Shop Loans

Pawn shop loans are available if you use an asset as collateral, such as jewelry, electronics, or a collectible. There are no credit checks required and minimal documentation. The pawnbroker will deliver the cash and hold on to the item until you have paid the debt.

Pawn shops charge fees, typically 20 to 25%. So, if you pawn an item for $100, you will need $120 to $125 to get it back. If the loan and fees are not paid in time, the broker can sell the item.

Credit Card Cash Advance

If you have a credit card, you can get a cash advance against your credit line. There will be an upfront fee, typically between 3% and 5% of the withdrawal amount, and the interest rate may be higher than it is for normal credit card purchases. Again, there are no credit checks for this type of financing.

What Are the Pros and Cons of an Online Same-Day Loan?

There are pros and cons to online same-day loans. The biggest advantage is that they provide immediate financial relief, but the biggest disadvantage is they are expensive.

Because same-day loans do not require a hard credit check, almost anyone with a stable income can get one, and the funds are deposited quickly. However, short repayment terms make it difficult for borrowers to pay off the loans in time, and high fees and APRs can cause borrowers to fall further into debt or lose their collateral.

How Much Does It Cost To Get A Same-Day Loan?

The initial cost for a same-day or payday loan could be between $10 to $30 for every $100 borrowed. Let's say you borrow $400 for two weeks before your next paycheck comes in, you would have to pay between $440 and $520 to repay the loan.

If you do not pay the loan back in time, the loan may be rolled over and an additional fee will be due on the $400. Also, the lender might charge a late or returned check fee. Your bank may also impose an "NSF" or non-sufficient funds charge if the check or electronic authorization is not paid because you don't have the funds in your account.

Are Same-Day Loans Worth Taking Out?

If a same-day loan provides you with the financing you need at a cost that you can afford, they are worth taking out if you can pay them back on time. However, if you think you may find it difficult to pay the loan back on time, the high interest rates and fees that you may have to pay may not be worth it.

If you have more time, borrowing money from family or friends or taking out a personal loan are better options than risking taking on expensive debt.

How Do You Know If You're Eligible For A Same-Day Loan?

Most banks and lenders will process your loan application within one day. They often will not pull a hard credit check, so the process will not affect your credit rating.

Many reliable lenders typically like to see a credit score of at least 670, but many others do not and value a stable income more than credit scores. Instead, these lenders will consider your whole credit history. You also have the option to use collateral.

Because eligibility requirements vary, research and compare lenders and loans to find the best one for you.

Where Can I Find Same-Day Loans Near Me?

Same-day loans are available in every state. Whether you live in Kentucky or Texas, you can request a same-day loan near you.

WeLoans is one lender-finding network that helps you find same-day payday loans near you. The platform has a powerful search engine. Just select the state that you live in and the website will automatically redirect you to a variety of local borrowing options.

Applying for a same-day loan online is much easier and more efficient than visiting a physical loan store. Many online lending sites allow you to "loan-shop" which means you can compare all your options for a same-day loan in one place and select the lender with the best terms for you.

How to Apply for a Safe and Secure Same-Day Loan Online

Before you apply for a same-day loan online, do some research and find a lender that offers the best rates and the lowest fees that you can find. Make sure you understand their terms for repayment and what will happen if you cannot repay the loan on time.

Once you have chosen a lender, gather the documents that you need. You will likely need a government-issued ID, such as a driver's license, evidence of your income (paystubs), your checking account information, and your Social Security number.

Fill out and submit your application. An online lender should let you know within 24 hours if your loan is approved and the money is deposited into your account. A traditional bank or credit union may take longer.

Can I Get A Same-Day Loan Without A Checking Account?

Most lenders will require you to have a checking account so that they can deposit the funds. The lender also may want to check your account to find out your current income, your debt, and if you can afford the loan.

If you don't have a bank account, some credit card providers may allow you to get a credit card and a credit card cash advance. This option, however, may require more documentation and will be more expensive.

Another option is to use a prepaid debit card. With this option, the money is deposited onto your prepaid debit card.

How Do You Get A Same-Day Loan With No Credit Check?

Many lenders are less concerned with your credit score and will not do a hard credit check, which can affect your credit rating, but will do a soft check instead.

For example, a no-credit-check loan is one where the lender may do a soft credit check (which will not affect your credit score) but also places significant weight on factors such as your income and bank account when they consider whether to qualify you for a loan.

You can also look for a lender who offers a secured loan, which will require that you put up some collateral in the form of a car title or other asset. Another option is to use a pawn loan where you risk losing your asset if you do not pay the loan back on time.

How to Repay Your Same-Day Loans on Time?

The danger of same-day loans lies in the fees and interest rates that you must pay if you have to roll over the loan for another two weeks. So, what can you do to make sure you pay off the loan in time?

First, find a loan with the lowest interest rates and fees. Second, cut your spending as much as you can while borrowing. Finding a side gig temporarily might be necessary until the loan is repaid.

If you run into trouble and find that you cannot pay the loan back on time, ask the lender for a repayment plan. They may be willing to work with you and may offer no additional penalties to roll over the loan for another couple of weeks if the alternative is getting nothing back at all.

Use lower-interest debt to pay off a loan, such as a personal loan from a credit union or bank. A personal loan can be extended for years making payments more affordable.

Alternatives to a Same-Day Loan?

To avoid the high ARPs and fees of a same-day loan, consider other options. These include a payday alternative loan from a credit union if you are a credit union member, a bad credit loan, borrowing from a funding circle or friends and family, or using a cash advance from a credit card.

For a bad credit loan, you will likely need a credit score of between 580 and 660. Or, you could use a co-signer, which will increase the likelihood that a lender will qualify you.

A lending circle is where a group of people set aside money each month for members of the pool to borrow from. There are online lending clubs that can help you improve your credit score if your payments are reported to the credit bureaus.

If you borrow from friends or family, sign a loan agreement that clearly sets out the terms and be aware that not adhering to them could create a rift among the parties involved.

If you have a credit score of 700 or higher, you may qualify for a 0% APR credit card. You can transfer the balance from other loans to the card.

The zero interest only lasts for a few months, and you may have to pay off the balance each month to avoid paying interest, but at least you buy time to pay off the amount you spend. After the zero percent period, the interest rate can skyrocket, so check the terms before you choose this option.

Bottom Line

Same-day loans are a convenient and quick way to get out of a financial bind. Traditional banks, credit unions, and online lenders offer them low credit requirements and short loan terms. Lenders charge high fees and APRs to protect themselves from risky borrowers who may default.

Short loan terms and high fees mean some borrowers find it difficult to pay the loans back in time. The loans are then rolled over and additional fees are added to the loan amount, which can lead to spiraling debt for the borrower. Because of this, same-day loans are best used only when absolutely necessary and all other options have been ruled out.

WeLoans can find you financing if you have poor credit scores and bad credit history. You can borrow up to $5,000 same day loans today and get approval from our trustworthy lenders without a hard credit check.

FAQs:

1. Are same-day loans safe?

There is always some level of risk when submitting your personal data to a lender. Check what protocols a lender has to ensure that your data is not shared with anyone and is secure.

2. How do I repay my same-day loan?

A same-day loan lender will usually ask for your bank account details and an ACH (automated clearing house) authorization to electronically withdraw the funds from your bank account when the loan payment is due. They may also accept a personal check or a payment from a prepaid credit card account.

3. What if I can't repay the same day loan? Can I roll it over?

Depending on the state, a lender will usually allow a borrower to roll over a same-day loan if they cannot pay it off by the due date. The lender will charge a fee to extend the loan on top of the principal and fees already owed.

4. Can paying off a same-day loan boost my credit score?

Your credit score may not benefit straight away if you pay off a same-day loan, particularly if the loan is the only loan on your credit report. However, if you have fewer loans overall once you repay the debt, you will have more borrowing power because you will reduce your debt-to-income ratio. Lenders use the debt-to-income ratio to decide whether to extend financing to a borrower.

5. How much can I borrow with a same-day loan?

How much you can borrow with a same-day loan depends on the state and whether the lender is a bank, credit union, or online lender. WeLoans will help you borrow up to $5,000 for a same-day loan.

References

1. What's a Good Interest Rate on a Personal Loan? - Experian
2. What To Know About Payday and Car Title Loans? - Consumer Financial Protection Bureau