A payday loan is best described as a very short-term loan that is needed to help you cover urgent cash needs until your next paycheck. These loans are regulated by each state and normally range between $100 to $500, but some states allow up to $1,000. These are fee-based loans which means there are set fees based on the amount you borrow, so you know exactly what you will pay back if you pay on time (highly recommended).
Payday loans are not for everyone. They can cost you much more than you expected if you are unable to pay them back on time. Before you request one, you should understand how they work and the risks you may be taking.
The 2 most common options to get a payday loan are: drive to a storefront and apply, or simply go online through any device and request an online loan. Most people opt for online payday loans because it saves them time and money for gas as well as improves the odds of loan approval. This is because many online services have several direct lenders to whom they can refer your loan request, thus increasing your odds of approval.
The process is incredibly easy and fast to complete. Go online and complete a loan request form and submit it. This often takes 3-5 minutes. Get an answer within seconds after submission. If approved, get connected directly to your lender, who will review your loan terms and conditions and answer your questions. If you agree with the terms, your cash will be deposited in your bank account within one business day.
There are some very basic requirements that you need to fulfill in order to get a payday loan:
The costs associated with payday loans are set by state laws individually. The fees generally range from $10 to $30 for every $100 borrowed. The average payday loan costs $15 to $20 per $100 that is borrowed.
Here is an example: you borrow $200, and your direct lender charges you a $15 fee for every $100 borrowed or $30 for this loan. You will owe $230 when the loan is due to be repaid. You should always repay the loan when it is due. Otherwise, you will be subject to additional fees, which will ultimately add up.
Most people repay their loans with a single payment on their next pay date. You need to verify the exact repayment date with your lender before agreeing to your loan.
Depending on your direct lender, you may have a couple ways to pay your loan:
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A payday loan can solve an urgent need for money in emergency situations. If you have other options to get quick cash, you should use them. If not, then a payday loan may be a great solution. If you have checks that will bounce, then the $35 per check NSF fees will likely be greater than your loan fees. Or if a utility bill is becoming overdue, the fees, penalties, new deposits, etc., will far exceed your loan fees. However, make sure to always look at all options before requesting a payday loan.
The average payday loan is around $300. Depending on where you live, you may borrow from $100 to $1,000. Most states allow payday lending but have a capped maximum loan amount.
Some states, like Nevada and New Mexico, limit each payday loan to 25% of your monthly income.
Because direct payday lenders do not run hard credit checks from the big credit bureaus, requesting a payday loan does not affect your credit score or appear on your credit reports. Also, payday loans do not appear on your credit report after you get a payday loan.
If you default on your loan, your lender will likely send it to a collection agency. The collection agency does have an option to report it as a collection account to the credit reporting bureaus, which then damages your credit score.
If you are an active member of the military, you generally cannot request a payday loan. There are protections in place for the military for a range of credit products, including payday loans, vehicle title loans, refund application loans, deposit advance loans, installment loans, and unsecured lines of credit. Check your eligibility before applying for any of these loans.
All states that allow payday lending require the lenders to be licensed. If a payday loan is made by an unlicensed lender, the loan is considered void. This means that the lender does not have the right to collect or require the consumer to repay the payday loan.
Each state has different laws regarding payday loans, including whether they are available through a storefront payday lender or online. You can access information related to the state-specific laws online.