Instant Online Loans - How They Work

Image courtesy stopnlook via Flickr.
Image courtesy stopnlook via Flickr.

Finding instant online loans is easy, almost too easy, and can put you in quite a bit of trouble should accept it without planning out how you are going to pay it back. The premise of these loans is extremely simple, and with a decent job history and a steady income you will have no problem getting a loan at all.

The point of this Hub is to help you understand how these loans work, and how you can be prepared with enough money when the time comes to pay the loan back. Many people end up just as broke (or worse off) the day they are to repay the loan as they were before they accepted it, so I want to help you avoid this problem and the debt trap that follows it.

How Instant Loans Work

This type of loan has a lot of different names.  It's called payday loans, cash advances, next day loans, same day loans, and a whole slew of others.  No matter what they're called, they work on a simple premise - your job!

In order to get approved, you're going to need a job that you've been at for at least six months.  In additions, most lenders require that you earn at least a $1000 in net income (after taxes) each month and also have a checking account.  Each lender has their own specific requirements, so check with them before applying.

Applying for a loan is almost too easy.  You'll fill out a simple form with your basic info and submit it.  After an hour or so, you're going to get an email on whether or not you were approved.

Paying The Instant Loan Back

This is where many problems start. In most cases, the money will be automatically withdrawn from your account the day that it's due. They will set up this day on your payday, or shortly thereafter, to make sure that you have enough funds for them to get paid. The problem is that the money is now gone, and you're scrambling for cash once again!

Local instant loans will generally have you write a post dated check for the day the loan is due, and they'll cash it on that day. Again, taking the money from you whether you can afford it or not.

Some lenders will set up payment plans that allow you to make bi weekly payments. This sounds awesome at first because you have a lot more time to pay it back, but in the end you're going to pay a ton more interest on an already expensive loan.

Ideally, you'll be able to pay the loan back early without penalty. Think Cash offers this, and your interest rate is prorated to your payoff date, so you can save money on your instant decision loan.

Being Prepared For Your Instant Loan

Should you decide that an instant loan is the best choice for your situation, you're going to need a way to make more money between right now and the day the loan is going to be paid back.  Here I want to offer up some tips that might be able to help.

  • Sell some stuff.  This is pretty obvious, take the extra stuff around your house and sell it on Craigslist, a garage sale, or at the pawn shop as a last resort.
  • Work more.  If you can work overtime at your job, do so.  If not, see if you can find some odd jobs around your neighborhood to try and earn some extra cash.  Try things like house cleaning, babysitting, or yard work for the people that you know.
  • Adjust your withholding.  In a pinch, you can reduce the amount of taxes that are withdrawn from your paycheck.  This is especially helpful if you earn quite a bit at your job.  The key is to adjust it back before you get acclimated to the extra money.  If you change it back you're going to end up having to pay a ton in taxes next year.  Talk to your HR department or manager to figure out how to do this.

These are just a few of the things that you can do to earn some money fast.  In the case that you're reading this before applying for a loan, use these to help you either reduce how much you have to borrow, or cover your financial emergency without a loan!

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