$400 loans are the type of borrowings that people usually take when facing financial difficulties. We all can get into a situation when we need to repair a car, pay for our medical bills, or cover current needs in case of personal reduction or salary cuts. Payday loans from direct lenders can become your financial assistance in all the financial emergencies or unexpected expenses you may face.
What Are the Reasons to Apply for a $400 Loan?
First, 400-dollar payday loans are a very popular short-term solution when you need instant money and have no time to wait for approval or gather all the required documents. The application process is easy and fast. You will get a guaranteed loan decision within 15 minutes after submitting your loan request form. The direct lender deposits money into your active bank account as soon as the next business day. A $400 loan is a good way to get your cash fast.
Next, payday loans are good for borrowers with poor or bad credit scores. It can be a challenge to get a loan from traditional financial institutions for people with bad credit. Banks and credit unions usually perform hard credit checks through 3 main credit bureaus. They pay attention to your credit score and can reject your loan request in case of bad credit.
As payday lenders usually do soft credit checks, they don't inform 3 main credit bureaus. That means that applying for a cash advance loan doesn't affect your credit score. Payday loan lenders typically ignore your credit history and pay attention only to your ability to repay the money. That is why a 400-dollar loan is a good solution for borrowers who already have some problems with their credit reports and can not get a loan from a bank or credit union.
Another popular reason to get a 400-dollar loan is that it is very easy to do. Direct lenders have very soft eligibility criteria that most applicants usually meet. You just need to be an adult resident of the United States, have an active checking account, steady income, national ID, and provide valid contact details.
Finally, most borrowers consider payday lending as an excellent way to solve their financial problems because they don't even have to leave their houses to apply and get the money. Almost all processes are usually online. The direct lender approves your loan application and transfers money to your active bank account. Then the lender electronically withdraws the money from your account at the end of the repayment period.
So, 400-dollar payday loans can be a great solution in case of financial emergencies when you need to get money fast, easy, and without losing the points of your credit score. It also can be the only solution for people with poor credit.
What Are the Pitfalls of a 400 Dollar Loan?
Although short-term loans may look very attractive, they are not a one-stop solution for every situation. The main cons of a $400 loan are:
- Limited amount. Usually, you can borrow from $100 to $1000, which is not always enough to cover all your current needs;
- Short repayment terms. As a rule, you must turn back money in one lump sum from your next paycheck. It is usually easier to repay an installment loan which has monthly payments in equal parts;
- Higher APR. That is why a $400 payday loan costs more, unlike traditional financial institutions' loans. The total amount you should repay consists of the loan amount plus interest rates and fees. Typically loan fees range from $10 to $30 for every $100 borrowed. So, if you have borrowed $400, you have to repay from $440 to $520, depending on the lender. Most lenders usually give a loan with an APR of almost 400 percent.
So, payday loans are not a perfect solution for all cases.