Better Day Loans review: Not a payday loan — but extremely high rates

Pros

• Smaller loan amounts availablenMay be able to receive your funds quicklynFixed installment payments

Cons

• Extremely high interest ratesnMust speak to a loan manager to compete loan applicationnNot available in all statesnLate and insufficient funds fee

What you need to know about a Better Day Loans personal loan

Better Day Loans is a tribal lender operated by the Kashia Band of Pomo Indians of the Stewarts Point Rancheria. It specializes in emergency installment loans for people with poor credit. You can begin the application process online and, if approved, Better Day says your money could be deposited in your bank account in as little as 24 hours. But keep in mind that depending on your bank, it could take longer to access your funds.

If you need money quickly to pay for a car repair, medical bill or another urgent financial need, here’s what you should know before applying for a loan from Better Day Loans.

Small loan amounts available

Some personal loan lenders have higher loan minimums, requiring you to borrow at least $1,000 or more. In contrast, Better Day Loans offers installment loans ranging from $200 to $5,000, so you can borrow only what you need. (First-time borrowers can only qualify for up to $1,500 though.)

Potentially receive your funds as soon as the next business day

If you’re facing an emergency and need money right away to cover the cost, you don’t have a lot of time to wait for application approvals and fund disbursement.

If you apply for a loan and are approved by 6 p.m. Mountain Time Monday through Friday, Better Day Loans says it will typically disburse your funds by the next business day. But keep in mind that depending on your bank, it may take longer to access your cash.

Extremely high interest rates

Better Day Loans advertises itself as an alternative to payday loans — expensive short-term loans. A typical two-week payday loan has fees that equate to an APR of nearly 400%, according to the Consumer Financial Protection Bureau.

But Better Day Loans’ installment loans have APRs that exceed typical payday loans. In fact, the APR on a personal loan from the lender can be more than double what you’d pay on a payday loan. Such a high rate could cause you to pay hundreds — or thousands — more than you initially borrowed.

Let’s say you qualify for a $500 loan at 780% APR. If you’re on a semimonthly payment schedule and make 24 payments of $162.69 per month, you’ll end up repaying a total of $3,904.56. That means you’ll pay more than $3,400 in finance fees on top of the loan principal.

Must speak to a representative to complete your application

With Better Day Loans, you can start the application process online. But before the loan can be funded, you have to talk with a customer service representative over the phone to verify your information. This hurdle is an extra step that some lenders don’t have; many personal loan lenders allow you to apply online and get a decision without speaking to a representative.

Late and insufficient funds fees

If you decide to take out a loan from Better Day Loans, it’s important to make all of your required payments on time. Otherwise, you could be charged costly fees. If your payment is late by more than two days, Better Day Loans will charge you a $30 late fee. And any payment that’s returned because of insufficient funds will result in a $30 fee.

A closer look at a Better Day Loans personal loan  

Here are some more details about Better Day Loans installment loans.

• Better Day Loans has multiple payment options — When you take out a loan, you can opt for weekly, biweekly or semimonthly payments.
• There are restrictions on first-time borrowers — If you’re a first-time customer, the maximum you can borrow is $1,500. Returning customers may be able to borrow up to $5,000.
• You must be at least 21 to qualify for a loan — To qualify for a loan from Better Day Loans, you must be at least 21, have a job or other regular source of income and have a valid bank account.
• Not available in all states — Better Day Loans doesn’t offer loans to residents of all states. If you live in Arkansas, Colorado, Connecticut, Georgia, Kentucky, Minnesota, New York, New Mexico, North Carolina, Pennsylvania, South Dakota, Utah, Vermont, Virginia or West Virginia, you won’t be eligible for a loan and will have to explore another lender.
• No prepayment penalties — Paying off your loan early is a smart way to save money. With Better Day Loans, you can pay off your loan at any time without any prepayment penalty.

Should I get a Better Day Loans installment loan?

With its sky-high interest rates, taking out a loan from Better Day Loans is an extremely expensive form of borrowing — something you might consider only if you have no other option for dealing with an emergency expense.

If you’re facing a necessary car repair, medical bill or another emergency, consider these alternatives before applying for a loan from Better Day Loans.

• Use a credit card. While credit cards can have fairly high interest rates, their APRs are typically much lower than you’d get with Better Day Loans or payday lenders. Even with less-than-stellar credit, you may qualify for credit cards designed for people with bad credit.
• Set up a payment plan. If you have medical bills, some doctor offices and hospitals will allow you to set up a payment plan and split the bill into smaller monthly payments.
• Request a payroll advance. If you’re employed, consider asking your employer for a payroll advance to get a portion of your next paycheck early.
• Ask for help. If you’re in a tight situation, asking friends or family for a small loan can be a more cost-effective way to pay for emergency expenses.

If those alternatives aren’t possible in your situation and you decide to take out a loan from Better Day Loans, develop a budget and repayment plan to ensure you can make all of your payments on time. If you can, make extra payments to get rid of the loan early to reduce the amount of finance charges that accrue.

How to apply with Better Day Loans

You can begin the application process online. But Better Day doesn’t have a prequalification option — so there’s no way to find out if you’d qualify for a loan and what interest rate you may receive without submitting a full application and triggering a hard credit inquiry.

When you apply, Better Day Loans will prompt you to enter your name, address, Social Security number, income and employer contact information. You also have to enter your bank account number and routing number.

Once you finish the online application, a customer service representative will contact you by phone to verify your information. If you’re approved, the loan may be disbursed in one to two business days — though the exact timing will depend on your bank.

Not sure if Better Day Loans is right for you? Consider these alternatives.

If you want to avoid costly interest charges or find a lender that allows you to check rates before applying, consider these alternatives.

• Earnin: With the Earnin app, you can borrow money against your paycheck without paying mandatory interest or fees (just optional tips).
• Rise: Rise allows you to check your potential interest rate before applying, and the rate check won’t affect your credit scores.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.