6 Common Mistakes You Need to Avoid When Applying for a Next Day Loan

When you need money to cover an emergency expense, it can’t come fast enough. In this case, a next day loan can offer the financial support you need, in the quick timeframe you require.

However, in your hurry to secure and use the funds, don’t forget to read the terms and conditions carefully. While these types of personal loans can be incredibly helpful in a dire situation, you never want to sign a contract that contains red flags.

With a little foresight and planning, you can choose a next day loan that meets your needs and doesn’t disrupt your finances. Today, we’re sharing six key mistakes that applicants commonly make, and how to avoid them when it’s your turn to apply.

1. Skipping the Research Period

If you need a personal loan by the next business day, it’s tempting to choose the very first offer that you come across. You might think that as long as you get money in your pocket ASAP, you can sort the details out later.

Yet, that’s the very issue that most applicants run into. Once you sign the dotted line, you’re officially agreeing to all of the terms that are contained within the loan agreement. Never rush through this stage, no matter how pressing your financial needs might be. 

Start by taking the time to assess the quality and reputation of the lender you’re working with. This includes any lenders you connect with online. While the internet can be a great place to find reputable, trustworthy lending networks, there are also unscrupulous providers in this space.

Read online reviews to understand the experiences that others have had on the platform. Ask questions if anything on your loan agreement seems unclear. Compare a few different types of loans to make sure you’re getting a smart deal.

This might seem like a waste of time, but you could wind up in a difficult financial situation if you accept a loan you cannot pay back in full or on time. The initial research phase is critical and you can’t afford to skip it.

2. Skimming the Fine Print

We get it. Loan contracts aren’t exactly New York Times bestsellers. However, that doesn’t mean you can afford to skip or skim over all of the clauses.

Much of the most important information contained within your loan agreement will be in the fine print. This includes details such as:

• The loan repayment period
• The interest rate and APR
• Any associated fees
• Information on collateral

No matter how quickly you need the money, we never recommend signing any type of loan document without reading over it carefully first. This includes every part, even the ones that seem like standard, boilerplate terms.

If you’re unclear about any part of the loan, don’t sign it just yet! Reach out to your lender to learn more and clarify the details. They’re used to fielding all types of inquiries and should be able to respond to you in a short timeframe. 

3. Estimating Your Ability to Repay

When determining if you should accept or reject a next day loan offer, don’t just estimate whether or not you’ll be able to pay it back. Actually spend time crunching the numbers and make sure that the repayment schedule comfortably fits within your personal budget.

Most personal loan lenders set up their repayment period in monthly installments. This means that you’ll be responsible for paying a pre-determined amount each month toward the total loan value, including any interest you accrue. If you aren’t bringing in enough income to cover these payments, you could default on the loan.

This step is even more critical when you’re applying for quick loans. Many of these lenders offer payday loans, which means you’ll pay them back the next time your employer pays you. Unlike a traditional personal loan, you’ll typically be required to pay the amount back in full, without the benefit of dividing the repayment over the next few months. 

If you assume that this step will be a breeze, you could be unpleasantly surprised when that bill comes in the mail. Review your income history and make sure the money will be in your account by the time the loan comes due. 

4. Accepting a Larger Loan Than You Need

When applying for a personal loan, some applicants may have to accept different terms than others. For instance, if your credit score isn’t where it needs to be or your income isn’t stable, the lender may require you to pay a higher interest rate or accept a shorter repayment period to lower their risk.

However, applicants with strong credit scores and stable incomes may qualify for more favorable loan terms. This could include a lower interest rate, a more flexible repayment schedule, or a combination of both. You may also secure better terms if you use a cosigner on your loan.

If this is the case, the lender could approve you for a higher amount of money than you need. At first, this might sound like a dream come true, but take a breath and a step back. Remember that you have to pay back everything that you borrow right now plus the interest you incur, as well as any associated fees.

While you might be able to pay a higher loan back now would you be able to do so if your income changed tomorrow? Do you trust that you can limit your spending to necessary items, only? For most people, the answer to these questions is no. 

It isn’t in your best interest to borrow any more than you absolutely need. Even if you do have the ability to pay it all back on time, this is a dangerous habit that could snowball into a spree of irresponsible spending and economic stress. To effectively manage your debt, remember to only take out as much as you require at the time, and nothing beyond that limit.

5. Spending Your Next Day Loan Recklessly

You should only use a next day loan or payday loan to pay off an immediate, emergency expense or urgent crisis. Some of the most common examples include: 

• Critical home repairs
• Critical vehicle repairs
• Urgent travel costs
• Unanticipated or unexpectedly high medical bills
• High or overdue utility bills

These are situations that would essentially worsen if you left the requisite costs unpaid any longer. If possible, you should have an emergency fund in place that can help you pay these expenses, but this isn’t always the case. In fact, one study shows that 57% of Americans don’t have $1,000 in savings to use for unexpected emergencies. 

A next day loan can help you cover those costs, but remember to use it wisely. In lieu of an immediate need, some people use this type of personal loan to cover unnecessary purchases, such as esthetic upgrades to their property, personal vacations, or lavish material goods.

You may even think about using your loan to help repay another type of loan. While your lender may not have any official restrictions or limits around how you can use your loan, it’s best to be prudent. Paying off one loan with another loan can put you in a never-ending cycle of debt.

Think carefully about whether you need to use a next day loan to cover the expenses in question. If you can technically afford to wait without suffering repercussions, a different type of loan might be more favorable.

6. Accepting Frequent Next Day Loans

By nature, next day loans are designed to be quick and efficient. For this reason, it’s easy to get attached to how simple they are to obtain. You could even find yourself falling into the habit of applying frequently, even if you don’t have any emergency expenses to cover.

To avoid falling into this trap, remember that these types of loans should always be considered last-resort options. While they might be a fast way to get money, they should not give you the freedom and flexibility to shop and spend more often.

By using them wisely and only in the event that you need to cover a one-off crisis, you can keep your overall expenses manageable. If you find that you have to apply for a next day loan on a regular basis to fund your lifestyle, there are likely bigger money matters at play.

A financial advisor can help you rein in your spending and take control of your budget. If you are living beyond your means, there are adjustments you can make to regain your financial footing. However, taking out a new loan every few days should not be one of them.

Stay Smart and Find the Right Next Day Loan

There’s an inherent sense of hurry when applying for a next day loan. You need cash immediately, and time seems of the essence.

However, by rushing ahead without caution, you could make one or more of these mistakes. Review the terms, verify the lender, and make sure you can afford the loan before you accept it. 

If you work with us, you can rest assured you’ll get a great deal from a lender you can trust. Complete our online form and we’ll connect you to our network immediately, so you can get back on your feet as quickly as possible.