The Payday Loan and You


We?ve all been there; some people, more than once. The money runs out and the month stretches ahead of us. Or the car gives out, the refrigerator dies, or maybe you have an unexpected medical bill. There comes a time when we all need a little extra money to tide us over until the next check comes. No matter what the situation may be, payday loans are available to help you through, even if you have bad credit or no credit at all. All you need is an income.

A payday loan, also called a payday advance, is a small unsecured loan against your future income. They are intended to help out in emergencies and should not be used to live beyond what you can comfortably afford. Unlike traditional loans, payday loans are not secured by any form of collateral. You don?t need to put up your car, or your house, or any other assets to secure the loan. Your job and your paycheck are your collateral.

The principle is simple. A payday loan advances you up to $1500 against your next paycheck. If you are a first-time borrower, the lender will set a limit on how much you may borrow. As you repay your loans, the amount you can borrow will increase, in increments, up to the store?s maximum.

In order to qualify, you must be at least 18 years old and a US citizen. You must also have some form of regular income and make at least $1000 a month. Social Security benefits, alimony, and disability payments count as regular income. You may be asked to provide a statement of benefits letter, pay stub, or other proof of income when you apply.

Active duty military personnel are not eligible for payday loans and should seek financial help from services on military bases. Don?t worry about bad credit or bounced checks. None of that matters. In addition, the interest rate on a payday loan is often less than the overdraft fees charged by many banks.

A payday loan is not automatically guaranteed. There are circumstances that may disqualify you. These include recent bankruptcy, unemployment or net income less than $1000 per month, unpaid payday loans, newly opened checking accounts, employment less than six months, or monthly paydays. Your lender will be able to tell you if you qualify. Interest rates on a payday loan vary by state but run anywhere from ten percent to twenty five percent over the period of the loan.

Because the money is deposited electronically, most payday loans also require that you have a checking or savings account. You will need to have bank routing numbers and account numbers handy when you apply. In some cases, cash cards, much like debit cards, may be available. Check with your lender about your options.

Payday loans generally take about 24 hours to process with funding a day after you apply. Lenders have cutoff times for next day service so be sure you check their policies. If you apply on a Friday or Saturday, you will most likely not receive funding until Monday.

It?s easy to apply for a payday loan online. Complete the online application and wait for a representative to call or email you. You will be asked to verify the information in the application, and may be required to provide proof. You will also be asked to provide the name and contact information for a reference who will be contacted.

Select a repayment plan from the several available options. You can opt to pay the loan in full, plus any fees or interest charges, when you get your next paycheck. Another option is to extend the loan and pay the fees or interest only, rolling the principle into a new loan. Because extensions will cost you the most in fees and interest, many states do not allow them. Check with your lender to be sure you have this option.

The final option is to pay your payday loan as you would a traditional loan: over time. With this option you pay a portion of the principle, plus applicable fees and interest charges, and extend the loan by two weeks. If you can?t pay off the whole loan after another loan period, you may be able to get another extension.

If you can?t repay the loan as planned, be sure to let your lender know several days in advance of the due date so that other plans can be made. Most likely you will be offered the opportunity to pay the fees and interest and roll the balance over into a new loan. If you do pay your loan in full, you will not be allowed to apply for another payday loan for five to six days, or until your payment is received by the lender.