Payday loans can be a great option if you find yourself strapped for cash and short on time. A payday loan is a short-term, small cash loan that allows you to pay back the principal and interest whenever you receive your next paycheck. Payday loans require that you have sufficient and steady earnings in some type of bank account. These loans cater to everyone, even people with bad credit scores, zero credit scores, or with a checkered financial history.
If you find yourself needing some help to make ends meet, keep on reading! In this article, we’ll explore what kind of payday loans you can get in Michigan and useful information regarding how Michigan consumers can get a payday loan.
How Do Payday Loans Work Exactly?
A payday lender will examine your earnings and other documents. If they deem you as a creditworthy individual, they’ll approve the loan request. In some cases, you can get the money that same day. If you request a payday loan online, lenders can process it can be processed faster.
The payday loan lender will also ask for a signed document or permission to withdraw cash from your bank account electronically to get their money back. Most lenders require that you repay your loan as soon as you get your next paycheck.
If you went to a store to get your loan, the payday lender would require you to leave a post-marked check with the loan amount plus interest. Online payday creditors use electronic fund transfers (ETFs).
What Is a Direct Payday Loan?
If you plan to use an online loan connection service, it’s important to note that they aren’t a lender. As such, they don’t make any offer or loan decision on your behalf. Instead, they offer a convenient service that connects you with reputable lenders in payday loans in Michigan. The lender they match you with is the one who’ll make any decisions regarding your application.
That said, make sure you’re using a reputable service. Not all lender networks are the same, and some can charge a fee with their service. They can also partner with shady lenders, so it’s important that you do your research and choose a well-established company with a reliable network of lenders.
How Much Does a Payday Loan Cost?
The cost of a payday loan can vary greatly since factors like loan amount and your creditworthiness are the deciding factors. They must provide this information before you sign any paperwork—if they don’t, that’s a sign that you might be dealing with predatory payday lending.
Does Paying Back Payday Loans Build Credit?
That depends on the lenders since no payday loans are exactly the same! Some payday lenders don’t report your non-delinquent loan activity to the bureaus, so the loan cannot assist your credit score rating.
If you fail to pay the payday loan back, you risk damaging your credit score. The payday lender can also document the default to the credit score bureaus or sell your debts to a collections agency to regain their losses.
Reasons to Get a Payday Loan
- Traditional banks won’t grant you a loan: Payday loans can help you get the cash you need if you can’t secure a loan through a traditional financial institution. Even when you can find a way around it, you might spend months or years trying to persuade them. However, obtaining a short payday loan to cover some unexpected costs is faster and more convenient. There are many reputable Michigan payday lenders out there; it’s just about taking the time to look.
- You need extra money to make ends meet: This might be the primary purpose why you can want a small short-term loan. A good number of the American population use these cash advances to take care of their bills. These charges consist of credit score card bills, utilities, and groceries.
- To repay another debt: No one likes debt, especially credit card debts. It has some of the highest interest rates and can quickly snowball into a mountain of debt. Once you start to default on your debts, credit card companies begin to call you frequently and send tons of letters until you repay the debt. If you’re tired of creditors bothering you and need to get them off your back for a while, you can turn to payday loans.
Payday Loan Alternatives to Consider
Get a Private Loan From a Credit Score Union or Online Lender
In all likelihood, a private mortgage will offer a lower annual percent fee (APR) than a payday loan, so it is more affordable. Credit unions tend to provide pretty good rates, even for people with affected credit. However, you’ll have to be a member. Online creditors can also work with these types of clients, but their rates tend to be higher.
Inquire if Your Bank Gives Small Cash Loans
Banks are beginning to provide small cash loans that may offer lower rates to consumers with a poor credit history. For example, U.S. Bank’s Simple Loan and Bank of America’s Balance Assist offer short-term loans for clients in good standing.
Cash From a Family Member or a Friend
A loved one or close pal can help you to sort out your budget. If they’re willing to lend you some cash, you avoid lenders and interest altogether. Just make sure that you pay them back on time—if you don’t, you may hurt that relationship and their trust in you.
Reach out to a Network Organization
There are neighborhood and local corporations that offer loans to help you deal with unforeseen circumstances. In addition, there are databases of neighborhood options to payday loans in Michigan.
You may also remember a pawnshop loan. While they can provide lower rates than a payday mortgage, they’re nonetheless costly.
What Happens When You Can’t Repay a Payday Loan?
Failure to pay on a payday loan can drain your bank account and damage your credit score. Therefore, it’s best to pay on time, every time.
A payday loan evasion can cause overdraft fees, collections calls, lower your credit score score, an afternoon in a courtroom, and an overall terrible experience. However, payday lenders don’t waste time while the cash you owe is due.
They can withdraw the cash right away from your bank account if you’ve given them permission as a part of the loan agreement. However, if you still owe them money, they will break the debt into smaller chunks to try to extract any cash in your account.
Each failed attempt to withdraw funds from your account can make you incur some hefty penalties and fines. In some extreme cases, they may even close your account. On the other hand, if they successfully get enough money out of your account, you might incur pricey overdraft fees if you don’t have enough funds.
When the loan is due, lenders will begin calling, sending letters from legal professionals, and contacting the people you used as references while you took out the loan.
Can I Extend The Time I Have To Pay Back The Loan Amount?
By law, payday loan clients can request to have a loan extension. However, this is at the discretion of the payday lender, with no repayment duration exceeding 31 days from the date of the loan.
Customers who’ve taken out eight or more payday loans in one year and cannot pay off their current loan can also request an installment compensation plan for that loan term.
That said, the lender usually won’t offer an extension; the customer needs to request the payment plan for themselves. The installments can be due on every of the subsequent three dates the customer gets everyday wages. During the repayment period, the customer cannot take out another payday loan.
How Many Michigan Payday Loans Can You Have?
The Deferred Presentment Service Transaction Act oversees Michigan payday loans. They regulate the number of loans a person can get, the number of service fees, and other payday loan-related transactions. You can access one loan at a time, provided your repayment time is no longer than 31 days after the transaction date.
When the payday lender processes your payday loan request, they will ask for your full name, address, social safety number, driver’s license, or Michigan state-issued I.D. They will also request the loan amount, along with the post-check or ETF authorization for when your loan is due.
The customer’s written agreement should consist of:
- A breakdown of the loan, including the due date, loan amounts, and the corresponding annual percentage fee.
- A borrower cannot have more than one payday loan at a time, even if they are with the same payday lender. Every loan is limited to $600, excluding fees. In addition, payday lenders have to verify that the customer can repay their loan.
What You Need To Apply For Michigan Payday Loans
- You have to be at least 18 years and above to apply. Lending cash to anyone below the age of 18 is against the law in the state of Michigan, as well as the United States.
- You stand a better chance as a resident of Michigan. To get a Michigan payday loan, you have to verify your resident repute by providing your home address.
- Your bad credit score or credit score rating shouldn’t be a problem in most cases. However, you will need to provide information stating that you have a steady income.
- You will also need to provide lenders with your current email and phone number so they have a way to reach you.
- You must not be a debtor in bankruptcy.
The Costs and Regulations Involved In a Michigan Payday Loan
When acquiring a 14-day $100 loan, the highest percentage interest fee lenders can charge you is 391%.
If the amount of money you are borrowing is between $30 and $100, the lender will charge you a 10% origination fee. If your loan is greater than $100, the origination rate cannot exceed $10.
Maximum Loan Amount
The highest loan amount that payday lenders are authorized to give out in Michigan is $600.
Maximum Loan Term
The repayment duration of payday loans in Michigan ranges from one week to 31 days.
Where Can I Make Inquiries or Ask Questions?
Licensed businesses are authorized to supply payday loans in the state of Michigan. To find out more about payday loans in Michigan or learn if a payday lender is licensed, you can contact the Department of Insurance and Financial Services at 877-999-6442. The mailing address is P.O. Box 30220 Lansing, MI 48909. Any concerns regarding a business providing payday loans must be addressed to the DIFS office.