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If you live paycheck to paycheck like millions of Americans, you might not have funding set aside for emergency expenses. So when you have unexpected car trouble, medical expenses, or important bills that must be paid on time, you can’t afford to wait until your next payday.
Some lenders out there understand that even the most fiscally responsible people may struggle to make ends meet sometimes, and they offer specific loans to help you get back on track: payday loans.
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Payday loans give customers the quick cash they need to pay urgent expenses. For added convenience, online payday loans enable you to apply for much-needed financial assistance from the comfort of your own home. This easy application process should only take a few minutes, and nearly any United States resident can qualify.
Read more about online payday loans below to decide whether or not this type of loan would help you meet your short-term financial needs. Be a wise consumer, and be sure to understand the terms and conditions of the deal you are entering into.
What Is a Payday Loan?
Essentially a payday advance, a payday loan entails taking out a small, unsecured loan equivalent to a portion of your next paycheck. Instead of a bank, you borrow these loans from a payday lender.
The loan amount can range anywhere from $50 to $5,000, depending on your state laws. The terms of the loan agreement may vary as well, but you usually have to repay the loan on your next payday. Your state may allow loan extensions, but you should try your best to repay the loan on time if you can.
As unsecured loans, payday loans do not require you to provide any collateral like a house or car, unlike some other short-term loans.
Can I Get a Payday Loan Near Me?
Whether or not you can get an online payday loan will largely depend on state regulations. Your state may have restrictions on loan amounts, and the loan terms often differ by state as well. Some states don’t even allow payday loans at all.
For example, let’s look at the state of California. Pursuant to the California Deferred Deposit Transaction Law, payday loan customers can’t receive checks over $300, and payday loan terms can’t exceed 31 days. The law also protects customers: When it comes to online loans, payday lenders can’t charge a fee higher than 15% of the loan amount.
As you can see, you should take a moment to familiarize yourself with your state laws before you fill out a payday loan application.
How Do Online Payday Loans Work?
Although payday loan terms vary by state, the lending process typically remains the same no matter which state you live in, assuming the state allows online payday loans.
To obtain an online payday loan, visit the lender’s site on either your computer or mobile device and fill out a payday loan application. You will need to enter your contact information, information about your income, and other personal details (see the requirements in the next section on this page). If you need help filling out the application, the lender should have a customer support system you can call or email.
After you submit the application, the next step of the online payday loan process involves waiting for loan approval. Many lenders will approve you for payday loans almost instantly, and then they will likely deposit the money into your checking account within the next 24 hours.
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What Is Required for a Payday Loan Online?
When completing the online payday loan application process, you may need to provide the following information:
- Social Security number
- Photo ID
- Email address
- Checking account details (routing and ABA number)
- Source of income
If you don’t have one or more of the items above, some lenders offer their customers special types of loans that do not require you to provide as much information. For instance, you may only have to provide your signature instead of bank account details when applying for these loans.
Depending on your state, you may have to meet additional requirements when applying for payday loans. In Alabama, for example, you need to be 19 years of age instead of 18.
Payday Loan Lenders vs. Brokers
Often called a loan connection service, a broker will use your application information to match you with a handful of direct payday lenders who can finalize the loan. Aside from providing multiple offers so customers can choose the best one, brokers don’t come with any other advantages. Reasons to skip the broker include:
One-Stop Shop
Forgoing the broker removes the middleman. Direct payday lenders handle the entire lending process from beginning to end, which usually means you will get approved faster and receive your money sooner. Plus, you won’t have to pay the service fee that brokers charge.
Privacy
To get your loan offers, a broker has to share your personal details. If you don’t want a third-party lender getting access to your information via data sources, direct payday lenders provide a much more confidential application process.
Reliability
If you choose an online payday loan lender you trust, you won’t have to worry about sharing your personal information with other, potentially shady lenders.
Reasons Why You Might Need a Fast Payday Loan
Because of their very high interest rates, relying on payday loan services should never become a long-term financial habit. Still, you can use payday loans in several situations, including the following:
Emergency Expenses
No matter how well you typically budget, sometimes emergencies happen, and you need to secure unexpected funding. Maybe your car broke down, your house got flooded, or you wound up in the hospital. Whatever the incident, a payday loan can quickly get you the cash you need to pay those emergency expenses.
You’ve Fallen Behind on Paying Bills
We all have planned expenses we have to pay: rent, utilities, groceries, credit cards, the list goes on. If you fail to pay some of these bills on time, you may dig yourself into a deep financial hole with a variety of fees, including late, overdraft, reconnection, and others—not to mention that your credit score will take a hit when you miss your payments.
Fortunately, getting a payday loan can help you stay afloat—just don’t fall into a debt cycle by taking one out every month.
You Can’t Get a Small or Short-Term Loan from a Bank
If you have a low credit score, you might have a difficult time securing a loan from a bank or another traditional lender. Plus, the bank loan process can be arduous: You have to make an appointment with a loan officer at the bank and fill out a lengthy application—and in the end, you might not even get the loan.
Or, maybe you don’t even keep your money in a bank account. In 2019, a U.S. Federal Deposit Insurance Corporation survey counted 7.1 million unbanked households. In this case, you can’t just walk right up to a bank and ask for a loan.
Either way, you can turn to a payday advance when you find yourself excluded by the bank system.
You Can’t or Won’t Borrow from Family or Friends
Asking a friend or family member for money can evoke feelings of shame and guilt, especially if you’ve already borrowed from them multiple times in the past. You will have to navigate the tension that comes with paying the person back, which can damage a relationship.
Whether you want to avoid family drama, your loved ones have cut you off financially, or they don’t have the means to lend you any money in the first place, online payday loans will enable you to stay discreet about your financial affairs.
Access Limited-Time Offers
Occasionally, you can save hundreds or thousands of dollars if you buy a product at the right time, but what if you don’t have the money then? As long as the sale will save you more money than you’ll have to pay in loan fees, payday loans can help you take advantage of special offers that you’d otherwise have to pass on while waiting for your next payday.
Can I Get a Payday Loan with Bad Credit?
While a payday lender may conduct a credit check before giving out loan approvals, you typically don’t need as high of a credit score to receive an affirmative credit decision here than you would from a bank. In fact, some payday lenders don’t even include a credit check as part of their process.
That said, customers with credit difficulties should seek credit counseling from a credit services organization. A credit access business can help you obtain extensions of consumer credit in the form of payday loans or vehicle title loans.
Will a Payday Cash Loan Hurt My Credit Score?
Payday loans don’t show up on the credit reports of the three major credit bureaus: Equifax, Experian, and TransUnion. Therefore, a payday loan shouldn’t impact your credit score as long as you repay it on time.
Do Lenders Offer Same-Day Payday Loans?
Some payday lenders offer same-day loans, but many can’t promise that you will actually receive the money that quickly. Even if you can get a same-day payday loan, you should exercise caution. Same-day payday loans often come with an outrageously high annual percentage rate (APR), sometimes up to 400%.
Alternatives to Payday Loans
If your state doesn’t allow payday loans or you simply decide you don’t want to go that route, you still have plenty of other options for getting short-term loans.
Use a Credit Card
Because credit cards almost always have lower interest rates than payday loans, you might want to consider using an existing credit card when you need money—just make sure you pay attention to how much you spend to avoid crushing credit card debt.
Small Personal Loan
As long as you have a bank account and a high enough credit score, you can apply for personal installment loans. To repay the loan, you’ll need to make monthly payments over the next few years.
Payday Alternative Loan
If you’ve been a member of a federal credit union for at least one month, you may be able to apply for a payday alternative loan. This type of payday advance allows you to take out roughly the same amount of money as you would with a payday loan, depending on your state, but you may get more time to repay it, possibly up to six months.
Cash Advance
Instead of borrowing money from payday lenders, you can often get a cash advance from your bank or credit union. However, you should know that these cash advances usually come with higher interest rates than your credit card does, as well as additional processing fees. Either way, it will be less than the payday loan interest rate.
If you don’t want to mess with your credit card, some mobile apps provide innovative cash advance options. You can ask for a—sometimes interest-free—paycheck advance, and when you get paid next, the app will automatically withdraw what you owe from your checking account.
Pay Advance
If your employer offers to pay advances for employees who need them, speak to your supervisor about this option. You will probably have to schedule a meeting and write a formal, detailed request explaining why you need the advance and exactly how much money you need. You should be able to find the exact company policy in your employee handbook or through human resources.
Because you’re asking for a pay advance rather than a loan you’d have to pay back, you won’t have to pay any interest. However, remember that if you opt to borrow from a future paycheck, your next paycheck will be much smaller than usual.
Life Insurance Loan
If you have a life insurance policy that includes cash value, the insurance company may let you borrow some of the money early. Unlike payday loans, you can take as much time as you need to pay back a life insurance loan. If you never pay it back, though, the company will typically deduct the amount you borrowed from the total death benefit.
In summary, fast payday loans online can be very convenient but sometimes very expensive ways to get quick access to money. If you are not careful, the amount you will pay back may be so high that it causes more financial distress. If you can locate a payday lender with reasonable interest rates, or find an alternative to payday loans, you may find the price of borrowing to be lower.
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