Online loans instant approval: How to find out if a quick loan is good for you?

Category: Questions & Answers

Leah googled “online loans instant approval” and she got a slew of online loans going by different names. She wants to know if they’re all the same:

“Hi, I searched for online loans using ‘online loans instant approval’ and got different loan names such as payday loans, short-term loans, cash advance, etc. Are all of these the same? I’m planning to get one to pay for the rent this month.” – Leah, San Diego, CA

Hi Leah,

Yes, generally they’re all the same type of loans, which are also popular in the UK and Canada. For simplicity let’s call them by your search phrase: online loans instant approval. Aside from the names that you’ve mentioned, they also go by terms like online loans, fast or quick loans, easy loans, or bad credit loans. Behind the cornucopia of names, they share similar characteristics.

Here are the five most common attributes of online loans instant approval.

1 The loan is small

Today, a direct lender can offer up to $3,000 depending on the borrower’s salary or credit, but on the average, online loans instant approval range from $200 to $500. Borrowers often use this loan to bridge the gap from payday to payday; hence, the term payday loan.

These loans are meant for contingencies, when you need cash fast, for example, during medical emergencies. Unfortunately, a Pew Charitable Trust study shows that most borrowers use these loans to cover for daily living expenses. It’s ironic and tragic because if you need to borrow for daily expenses, your income is likely not enough to pay back the loan. This traps you into a debt spiral. My advice is never to use online loans instant approval where living expenses or, worse, leisure purchases are involved.

2 You can get a loan even with bad credit

online loans instant approval live by their name, “no credit check.” That means even with a bad credit, borrowers can secure a loan as long as they have a job or a regular source of income and a bank account.

The lack of credit check makes these loans enticing for people who have bad credit. With limited access to mainstream lenders like banks and creditors, borrowers with bad credit turn to online loans instant approval on how to get a loan. Unfortunately, when they default on these loans, they pay a hefty price, which is the next attribute of these loans.

3 High interest rates and stiff penalties

Depending on the state where the loan is made, interest rates range from 12% to 25%.  The annual percent rate can be as high as 391%, which makes online loans instant approval  a high risk to default on. The penalties can be charged every two weeks (every payday) that can quickly pile up if you miss payments for even a month. Borrowers often renew their loan just to avoid defaulting. But this is not recommended. You can end up paying three times as much as the original loan.

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4 Approval is fast and easy

Borrowers simply fill up an online form with their personal and work data and bank account and submit the application. A direct lender can now bank transfer the loan on the same day, thanks to Internet banking. The ease of securing these loans is in fact the loans’ main appeal.

5 They target people who are perennially short in cash

It’s the sad truth. Online loans instant approval are often targeted at people who have difficulty paying back loans. In fact, the nature of the amount being small means borrowers cannot raise such amounts easily. It’s a chicken and egg scenario; these loans are meant to help borrowers meet their financial needs, but often, they bury borrowers into further debts.


Online loans instant approval are best used during emergencies. They cannot replace your income to cover for daily living costs. If you need additional budget for your daily expenses, it’s best to find a way to increase your income or bring down your living costs.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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Harold kumar says:

I know someone who uses small loans to fill his budget gaps between paydays. When he computed his interest payments in a year, he was surprised it amounted to almost two months of rent. That’s what happens when you treat these loans as part of your daily budget. You’re actually paying more in the long run. I’d use these loans during emergencies only. Not to pay for my food, rent or utility bills. These are regular expenses that are better paid by your regular income.

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Joy Valdes says:

The last attribute is a little alarming, don’t you think. Targeting people who are always short in cash. It’s so easy to get these loans that often borrowers forget to think of an exit strategy. But how often do we hear people defaulting because, yes, they’re short in cash? The trick is to borrow less, but then again, when lenders dangle an array of pretty loan packages in front of you, how can you resist?

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