David Morey 
When people are faced with unexpected or emergency financial needs, they often look out for loans that are quick and accessible. One such option available is a same-day loan without collateral. These loans provide consumers with the opportunity to get quick funds without presenting any collateral.
Collateral is the valuable asset that a borrower puts down as a security to obtain a loan. Credit facilities obtained through these means are known as secured loans, and they are not easily available to a wide range of individuals. Unsecured credits, on the other hand, are more available to a wider range of consumers because they do not have to put down any asset of value as security. Same-day loans, which are also known as payday loans, are unsecured loans and are quite popular among a wide range of borrowers.
However, like any other financial product, these particular types of credit have their pros and cons. In this article, we will assess these pros and cons and also discuss how to get these loans easily. You can click here for more on the basics of same-day loans without collateral.
Pros and Cons of Same-Day Loans without Collateral
We have established that these loans are quite popular among a wide range of borrowers for a number of reasons. We also stated that this product comes with some pros and cons; we now go ahead to elaborate on them.
Pros
The following are the advantages or benefits of this product:
Accessibility
One of the most notable advantages of this particular financial product is the breadth of its accessibility. It is easily accessible to a lot more people than the traditional loans. Most traditional credit facilities, such as auto loans or mortgages, require collateral. This means that the borrower must put down an asset of value to be approved for credit. This condition most often limits the number of people that can qualify for this facility.
Payday loans, on the other hand, do not require collateral and therefore are accessible to those who do not have assets of value to put down as security.
Fast Approval and Disbursement
Same-day credit, just as the name implies, is a product that offers quick approval and speedy disbursement of funds. The process of reviewing applications for this facility is usually automated and, as such, is faster than applications for traditional facilities. All the borrower has to do is to complete the application form online, and the system will take over from there.
This process saves a lot of time and effort, enabling the lender to know whether the applicant’s request can be granted or not. Once the application is approved, the money is paid almost immediately to the borrower’s bank account.
Minimal Documentation
The documents that are required in the application process are usually the barest minimum. This is in contrast to conventional credit facilities where the borrower is expected to submit a variety of documents such as bank statements, proof of income, and credit history.
Although every lender will ask for some form of identification and proof of income, the application process is more streamlined and reduces the stress and time spent preparing all the paperwork required in a traditional loan application process.
Flexibility and Versatility
These credit facilities can be used for any purpose no matter what was stated in the application as the purpose of the loan. There is no law binding the consumer to use the funds as stated; that column is usually a formality to ensure that the funds will not be used for any illegality. This makes this credit quite versatile.
Lenders of this type of loan often have different options for repayment. This allows the borrower to choose the repayment schedule that works best for them. This flexibility works in the best interest of the borrower.
Cons
These points that we discuss below are risk factors that should be considered; they can be mitigated and as such should not stop consumers from enjoying the benefit of this credit facility.
Higher Interest Rates
One of the highest cons of this credit option is that they come with higher interest rates. This is actually quite understandable as the facility is not backed by collateral. This lack of collateral means that there is no security backing the loan and this poses a greater risk for the lender. Therefore, the lender has to charge higher interest rates to mitigate the risk.
Borrowers can get around this con by researching and checking out as many offers as possible. Ensure that you look at all the terms and conditions which include every fee and charge that the loan comes with and the interest rate. Compare all the offers carefully to find the offer with the cheapest overall cost.
Lower Loan Amounts
Unlike secured loans, same-day loans do not offer very large amounts of money. The lender relies only on the creditworthiness of the borrower to determine the amount that they will approve. The amounts approved may be sufficient to take care of emergencies or unforeseen urgent financial needs, but they cannot fund capital-intensive projects.
It is therefore expedient that you look at the need on the ground to determine whether this credit option is the best for you, or you have to look for other options.
Shorter Repayment Periods
Payday loans usually have shorter repayment durations which may be a few weeks or months. This means that monthly repayments are usually higher than traditional loans. These higher amounts may not be convenient for people in some kinds of financial circumstances. This, therefore, means that the borrower has to evaluate their finances and be sure that they can make the monthly payment(s) before committing to the loan. If you cannot comfortably repay this debt do not bother to borrow the money.
How to Apply for Same-Day Loans Without Collateral
Applying for these types of credit is actually a straightforward process. Although some lenders may have a little variation as per their requirements and process, below are the general steps for applying for payday credit:
Comparison Shopping
Comparison shopping is the process through which a consumer goes through offers of similar products from different providers. So, for this type of credit, you have to start by researching lenders. Look at the terms and conditions that they offer, and these include the interest rate, terms of repayment/duration of repayment, eligibility criteria, and any other fees and charges.
Also, read customers’ reviews to help you have an idea of the type of service that each lender offers and which of them will be of the greatest benefit to you. Check out this site for tips on comparison shopping: https://www.moneymanagement.org/.
Check Eligibility Requirements
Check the eligibility requirements of all the lenders and find the one that suits you the most. Although the eligibility criteria for these credit facilities are not as stringent as traditional lenders, there may still be requirements that may be too rigid for you or that you do not meet.
Gather Required Documents
It is true that there is minimal paperwork in the process of application; there are still some basic documents that you have to present. Some of these documents include personal identification, proof of income, and proof of residence. So, ensure that you have the basic documents that are required ready before you start applying so that you will not waste time once you start.
Fill out and Submit the Application Form
Most financial institutions that offer this product are online lenders so you will have to go to their website and fill out the application form. In the event that you choose a lender that operates a physical office, then you will have to visit the office to fill out the application form.
Ensure that you give accurate information as you fill out this form. It would not do you any good to falsify information. Information required may include personal details, employment information, the amount you want, and when you want to repay. Once you are done, submit the application.
Await Approval and Disbursement of Funds
After you have submitted the application, you await approval and once the loan is approved, the requested amount is disbursed.
Accept the Loan and Plan Repayment
Once you accept the loan, bear in mind that your time starts counting so you need to already have a repayment plan. Make sure that you follow through on your repayment plan so that you would not fall into a debt cycle.
Conclusion
We have looked at the pros and cons of same-day loans and we have shared tips on how to mitigate some of the cons that represent a risk to the borrower. It is essential that you bear these tips in mind because much as this credit facility can be a lifesaver, you can also fall into a debt cycle if you do not borrow responsibly.
