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Payday Loans Online

Angela Mae Watson

Written by

Angela Mae Watson
Katherine Fan

Edited by

Katherine Fan
Paul Sisolak

Reviewed by

Paul Sisolak

Managing everyday expenses can be tricky enough, but dealing with unexpected bills can be stressful and overwhelming. Even if you have a steady job, a financial emergency can still put a major dent in your bank account or wallet. Depending on the cost of the bill, you might not even be able to pay it on time. That’s where payday loans can come in.

Payday loans are small loans designed to help cover emergencies such as a surprise medical bill or a flat tire. These loans are typically easy to qualify for and come with fast approval and funding times.

Payday loans may seem like a good short-term solution to unforeseen expenses. However, many payday loans require very fast repayment and come with very high interest and fees.

If you need a small sum of money fast, a payday loan could help. Here’s everything you need to know about these short-term loans, and when one might be right for you.

What Are Payday Loans?

Payday loans, or cash advance loans, are a common type of alternative financing to personal loans. They’re so common, in fact, that roughly 12 million people take out payday loans each year.

Like many personal loans, payday loans are usually unsecured. What this means is that you don’t need to put up collateral — such as a car — in exchange for funds.

You typically don’t need to have good credit to qualify for a payday loan, unlike you would with most unsecured loans. Some lenders do not check your credit at all. Because of this, some people refer to payday loans as “no credit check loans” or “no credit loans.”

Payday loans usually come in small amounts ranging from $200 to $1,000. However, some lenders offer larger loans — up to $2,000 in some cases — to people who need the funds quickly. Your state may set a limit on the amount of money you can borrow against your paycheck in a single loan transaction.

These loans also come with relatively short repayment terms. Most lenders require you to repay what you borrowed — plus any finance charges — on your next payday. This is usually within two to four weeks of taking out a loan.

You can get a payday loan from many different places. One of the most common options is a storefront payday lender. With these lenders, you’ll need to go in person during the lender’s business hours to apply for a loan.

Some direct lenders also offer payday loans online. This is convenient because you can complete the entire loan process — from the initial application to repayment — from the comfort of your home.

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How Do Payday Loans Work?

The way payday loans work is straightforward. As with any loan, the process typically starts with you finding a lender. This can be either a brick-and-mortar lender, an online lender, or one that offers both in-person and digital loans.

Once you’ve found the lender you want to use, you’ll need to apply for the loan. There are minimal eligibility requirements for getting a payday loan. In most cases, you’ll need to be 18 years of age in most states, and 21 in others. You’ll also need to have proof of income, and an active checking account with a bank or credit union.

Although not common, some lenders may also check your credit when you apply. If the lender does check your credit, you’ll see a hard inquiry on your credit report. This hard inquiry may temporarily bring down your credit score by a few points.

Once a lender approves your loan, they may disburse the funds to your checking account via direct deposit. Or they may provide you with cash, check, or a prepaid debit card for the loan amount.

The time to funding is usually quick — often within minutes or a few hours of applying, if you’ve been approved. However, if you apply near the end of the day, you might need to wait until the following business day to receive funds.

As with any loan, you’ll need to repay your payday loan on or before the date listed in the loan agreement. Most lenders require a one-time payment that includes the full loan amount plus any finance charges.

If you’re having trouble paying back your loan on time, you may be able to roll it over into a new loan. This essentially lets you take out a second payday loan to cover the first. Doing this resets the repayment term, giving you more time to pay back what you owe. Keep in mind that the new loan may come with its own finance charges, which can increase how much you owe.

Here are the main ways to repay a payday loan:

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With a postdated check:

Some lenders will ask you to write a postdated check when you take out a loan. When the loan comes due, the lender will cash the check and they’ll be debited from your account.

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Via direct deposit:

Your lender may ask you to complete a direct debit authorization form. This allows the lender to electronically withdraw the funds from your connected checking account.

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With cash or check:

Payday loans don’t usually come with a prepayment penalty — that is, a fee for paying off the loan early. If you have the money, you can pay off the loan early without penalty.

Benefits of Payday Loans

Payday loans should only be used as a short-term financial solution, and only if you are certain that you can repay the full amount owed when repayment is due. However, they come with a surprising number of advantages that other financing options such as installment loans and credit cards don’t offer.

Here are the main benefits of payday loans:

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Don’t require good credit

Qualifying for most loans requires good credit, typically defined by a FICO score of 670 or higher. However, borrowers with poor credit or limited credit history can still qualify for payday loans. This makes these loans more accessible to those who need them.

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Fast application and funding times

The application process is often easy, secure, and 100% online. Most lenders can approve and disburse funds the same day they receive the application. This is especially beneficial in the face of an emergency.

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Minimal requirements

Payday lenders usually have more lenient requirements than other loans, making them easier to get.

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Flexible funds usage

The funds can be used for nearly anything, including car repairs, medical expenses, utilities, gas, groceries, or other small bills.

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Transparent fees and terms

Reputable lenders will list the fees, terms, and conditions before requiring a full commitment to the loan. This gives the borrower the chance to review everything and make an informed decision.

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Could prevent late fees or other penalties

Since they’re readily available, payday loans can be used to cover emergencies or to get the borrower to their next paycheck. And, if the money’s used to pay for a smaller bill, the loan could even help prevent late fees or other penalty charges.

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Short-term commitment

While other loans can have repayment terms lasting for months or years, borrowers can pay back their payday loan within weeks. As long as the borrower has the necessary funds, they can avoid long-term debt.

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Readily available

With online lenders, borrowers can apply for a loan even if they’re not near a storefront location.

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No penalty for early repayment

Unless a specific lender charges a prepayment fee, it’s possible to repay the payday loan early. This can also reduce the risk of late fees.

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Regulated lending

Reputable payday lenders are typically licensed and regulated at the federal and state level. Certain states have additional laws designed to protect the borrower.

Payday Loans Rates and Fees

Generally speaking, payday loans don’t have a typical interest rate. However, they do still come with certain fees — or finance charges. Common fees include an origination fee and an annual percentage rate (APR).

Payday lenders usually set their own fees based on the loan amount. However, a lender may adjust their fees based on other factors like your income. Some states also put a cap on how much a lender can charge.

According to the Consumer Financial Protection Bureau (CFPB), the typical finance charge for a payday loan ranges from $10 to $30 per $100 borrowed. This finance charge is added to the total cost of the loan, and must be paid when the loan is due.

Here’s an example:

Let’s say a lender charges $20 for every $100 borrowed. If you take out a loan for $300, you would owe $60 in fees plus the original $300. The total cost of the loan would be $360, and you would need to pay it on the loan’s due date, which typically falls on your next payday.

Now, say a lender charges $10 per $100 borrowed. If you take out a loan for $500, your total finance charges would be $50. The total amount you owe is $550.

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Some payday lenders have additional fees, such as:

Speak with your payday lender about any possible fees before signing for a loan. Also, review the loan agreement carefully so you know about any extra charges, and how to avoid them.

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Repayment plan fees

Certain states require lenders to offer repayment plans to borrowers who can’t pay what they owe on time. Some lenders will charge a fee for this.

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Prepaid debit card fees

Some prepaid cards come with additional fees. Contact the card issuer to find out about any potential fees.

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Late fees or overdraft fees

You could end up with late fees if you don’t pay back the loan on time, or if your check bounces. If you don’t have enough money in your account, you could also be facing a non-sufficient funds (NSF) charge or an overdraft fee.

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Rollover fees

If you roll over your current loan into a new one, the new one will have its own fees. These fees may be for the same amount as the original loan, or they could be higher.

How To Apply for a Payday Loan Online

Payday loans are popular for many reasons. Their fast funding times, minimal requirements, convenience, and overall accessibility make them a good option for people who need funds immediately.

But these loans aren’t right for everyone, nor are they the best — or only — solution in all cases. That’s why it’s important to make sure a payday loan is the best option for you before applying.

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With that in mind, here’s what to consider — and do — before getting a payday loan online:

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Compare payday lenders and loan options

The term “payday loan” is relatively loose. Some lenders claim to offer payday loans, but may require you to put up an asset as collateral for the funds. Certain lenders aren’t very reputable and don’t have the legal right to lend money in your state. Before getting a payday loan online, carefully vet any lenders you’re considering first.

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Read through customer reviews

Many payday lenders show recent customer testimonials or reviews on their main website. However, you can also check places like the Better Business Bureau (BBB) to see what people are saying about the company.

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Make sure you can afford the loan

Part of the major stigma against payday loans comes from the short repayment terms and relatively high fees. These can make it hard to pay back the loan on time. However, you can avoid this issue by reviewing your budget and making sure you can afford to repay what you borrow plus any fees.

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Consider all of your financing options

Payday loans aren’t the only short-term financing solution. Other options to consider include credit cards, personal lines of credit, or loans from family and friends.

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Review the loan requirements and fees

Requirements and fees vary by lender, so check what these are before choosing one. Taking a few minutes now could save you the headache later.

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Check the lender’s licensing status

Like other lenders, payday lenders must be licensed to operate in your state. Check with your state’s Attorney General office to see if a company can legally lend you money. You may also be able to find this information on the lender’s website, usually near the bottom of the page.

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Learn your state’s laws and your rights as a consumer

As a consumer, you’re protected by several state and federal laws. If you’re not sure what these are, contact your local Attorney General and ask about them. While you’re at it, ask about your state’s payday lending laws, too.

Requirements for Getting a Payday Loan

Payday loans usually have much more lenient requirements than other loans. The exact requirements depend on your state, but here’s what you can typically expect:

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Proof of identity and age

You’ll usually need to be at least 18 years old to be eligible for a payday loan. You may need to provide a Social Security Number (SSN) and a government-issued photo ID, such as a driver’s license or passport, verifying your identity.

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Proof of residence

You’ll need to be a resident of the state in which you’re applying for a loan. Be prepared to verify your residency with formal documentation such as a recent utility bill or leasing agreement in your name.

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Contact information

Most lenders require some basic contact details such as a valid phone number, email address, and mailing address. In some cases, they might also require you to provide the contact information of at least one reference, such as a friend or family member.

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Proof of income

Although the exact amount varies by lender, you’ll need to verify your income before you can get a loan. Commonly accepted forms of income include employment, self-employment, retirement or social security, and disability checks.

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Active checking account

Lenders typically require proof that you have a bank account in your name. They may use this information to deposit or withdraw funds for the loan.

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Credit score

In certain cases, you’ll need to undergo a credit check, although most payday lenders have minimal to no credit score requirements.

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Other requirements

Some lenders will not work with active duty military personnel, particularly if they can’t guarantee where they will be in 30 days. Payday lenders might also not work with individuals with a currently active bankruptcy case.

What You Need To Apply

Although the specifics can vary, here’s what you’ll usually need to apply for a payday loan:

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Proof of income

W2s, letter of employment, recent bank statements, recent tax returns, paystubs
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Valid ID

state ID, driver’s license, military ID
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Proof of direct deposit

(only in some cases)
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Social Security card and number

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Basic contact information

phone number, email address
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Physical address

and mailing address, if different
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Proof of residency

recent utility bills, mails, mortgage statements, lease agreements
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Bank account information

Even if you’re not applying for a payday loan, this information is standard for most loan applications. Once you’ve gathered everything together, you can then proceed to the rest of the application process.

Steps To Apply for Payday Loans

If you’ve weighed your options and decided a payday loan is what you need right now, it’s time to take the next step: Actually applying for the payday loan. The process may vary by lender, but here’s what it typically looks like:

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Compare several lenders

If you haven’t already, compare three to five lenders to determine which one is right for you. Check out their online reviews, licensing status, terms, fees, loan amounts, funding times, and eligibility criteria. When in doubt, contact their customer service team for more information.
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Gather all the necessary information

Getting a payday loan is easy, but it’s even easier if you have all of your information or documents together before applying.
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Complete the formal loan application

After choosing a lender, complete their application process. This can be done online or in person, depending on the lender. Be prepared to submit any documents or additional information upon request.
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Wait for the decision

The lender will review and verify your information. This process can take anywhere from a few minutes to a day or two.
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Review and accept the loan agreement

If approved, you’ll receive a loan agreement. Read it carefully and make sure everything looks right. If it does, sign for the loan and wait for the funds to arrive. Oftentimes, you’ll receive the money the same day you accept the loan.
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Use the funds

Now that you have the money, use it as needed. This could be for something like vehicle repairs, small medical expenses, or emergencies.
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Pay back the loan

Be prepared to pay back the loan — plus any fees — on or before the due date. You must pay back the loan and associated fees in full by the due date in order to avoid incurring late fees or additional charges.

Why Your Payday Loan Application Was Rejected

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Payday loans may be easy to qualify for, but they’re not a guarantee. Here are the most common reasons why your loan application might be rejected:
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You currently have a payday loan

Many states restrict the number of payday loans you can have. In some cases, you can only have one loan at a time. If you currently have a payday loan, you’ll need to pay it off before applying for a new one.

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You’re not a resident of the state

Even if you’re getting a payday loan online, you’ll still need to be a resident of the state in which you’re applying. A lender might reject your application if they can’t verify your identity, residency, or contact information.

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Your income is insufficient

While income requirements are usually relatively low, a lender could still decline your application if they believe you don’t make enough money to pay back the loan.

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You’re dealing with an active bankruptcy

Some payday lenders won’t work with borrowers with an open bankruptcy case. The same goes for borrowers who already have too many other debts. If this sounds like you, speak with a lender to discuss your options.

What Happens if You Don’t Pay Back Your Payday Loan?

Any loan, no matter how big or small, is still a financial commitment. In other words, you’re responsible for paying back your debts — including payday loans.

If you don’t pay back your loan, any of the following things could happen:

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The unpaid balance will incur fees

The lender will try to withdraw the money they’re owed from your account, either through direct debit or check deposit. If this fails, you could end up facing non-sufficient funds (NSF) fees, overdraft fees, or other charges. The lender might also tack on a late fee to your account.

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Your lender may offer a rollover or renewal option

Depending on your state, your lender may give you the option to roll over your current loan into a new one. Or they may give you the chance to renew your loan. Both options can come with additional finance charges.

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A debt collection agency could contact you

After a certain amount of time has passed — usually around 30 to 90 days — your lender could sell your account to a collection agency. If that happens, a debt collector could start contacting you in an attempt to get the money you owe.

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Your credit could take a hit

If the lender reports the unpaid account to the three major credit bureaus — Experian, TransUnion, or Equifax — the report will show up on your credit report. In turn, this hit could hurt your credit score and make it harder to qualify for other forms of financing in the future.

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Your lender could file a lawsuit against you

If all else fails, the lender might take you to court. This is more likely to happen if you owe a larger debt, but it could happen even if you only owe a few hundred dollars. Never ignore a lawsuit, as this could lead to other consequences such as garnished wages.

Failure to pay back a payday loan isn’t considered a criminal offense, meaning you won’t go to jail or be arrested.

However, it will still become a stressful and negative problem that you’ll have to deal with at some point.

In an ideal situation, you’ll know in advance that you won’t be able to make your payment on time. The good news is that payday lenders are often willing to work with you to make sure you can pay back what you owe.

Depending on your situation, you may be able to negotiate with them for a better repayment plan. Or you might be able to settle your debt for a smaller amount. Make sure you get any changes to your original debt in writing.

Payday Loan Uses

You can use payday loans for many different reasons, but most people use them for emergencies or short-term financial relief. Here are some of the more common uses for payday loans:

  • Routine living expenses like car payments, utility bills, rent, or gas
  • Credit card or small loan payments
  • Food
  • Medical bills
  • Broken appliance or equipment replacement

For example, a payday loan could help if you need a few hundred dollars to help cover rent until you get paid in a few days. Once your paycheck comes in, you can then use it to pay back what you owe. A payday loan could also help you settle a smaller outstanding account, such as a utility bill. Not only can taking out a payday loan help you prevent late fees, but it can also keep the unpaid account from damaging your credit score or leaving you without any electricity at home.

Payday loans can be expensive, so it’s generally best to use them as a temporary solution, rather than as a permanent one.

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How To Compare Payday Loans

It’s always a good idea to compare payday lenders to see what rates, loan amounts, repayment options, and eligibility requirements they have. Besides that, here are a few other things to consider when choosing a lender:

Terms of repayment

Some payday lenders include a clause in the loan agreement that lets them break up the payment into several smaller payments if the first attempt doesn’t go through. This could lead to expensive NSF fees.

Reputability

Some payday loan providers are not legitimate or reputable. Review their licensing status and make sure they’re allowed to operate in your state. Also, check sites such as the Better Business Bureau or Trustpilot to see what kinds of reviews they have from previous or current customers.

Customer service

Whether you’re looking for an online payday lender or a storefront option, it’s important to choose a company with good customer service. Check their options for contacting them, such as through an online form, online chat or phone number. Ideally, try contacting your potential lenders through those methods to ensure that you can reach a live person if you need to do so.

Complaint resolution

Every company has its share of customer complaints. What matters most is how they go about handling those complaints. Choose a lender with a good reputation for resolving issues.

Flexibility

Although the ideal situation would be to pay back your loan on schedule, things happen that might delay your payment. Because of this, it’s a good idea to find a lender that offers extra flexibility when it comes to repayment options.

Transparency

Communication and transparency are key when it comes to loans. So, pick a lender that’s open about their terms, fees, conditions, and so forth.

Ease of use or accessibility

One of the biggest advantages of payday loans is that they’re easy to get. Look for a lender with a user-friendly website and simple application process.

The Pros and Cons of Payday Loans

Every type of loan comes with its share of disadvantages and advantages. Here are the main ones to consider with payday loans.

Payday Loan Pros

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Easy application process with minimal requirements

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No credit check needed (in most cases)

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Fast funding times — often within a few hours

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Can be used for nearly anything, including unforeseen expenses or to bridge the gap between now and your next paycheck

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Don’t require collateral

Payday Loan Cons

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Not available in every state

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Not intended as a long-term financing solution

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May come with high fees or APRs

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Short repayment terms can be difficult to manage if you’re not prepared

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Does not help you build credit unless the lender reports to the credit bureaus

Alternatives
to Payday Loans

Whether you choose to get a payday loan or not, it’s still important to understand all of your options. Here are some alternatives to consider:
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Installment loan

This is a type of personal loan that can be used for nearly any purpose. Unlike payday loans, installment loans come in larger amounts and have longer repayment terms. You’ll need to make regular payments every month until you’ve repaid the loan in full — plus any interest or other lender fees. You may need good credit and a low debt-to-income (DTI) ratio to qualify.

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Credit card

A credit card is a form of revolving credit that you can continually borrow against up to your credit limit. Your credit limit is based on several factors, including your credit score and income. Each month, you’ll need to make payments on the amount borrowed plus interest.

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No credit check loan

This is a catch-all term for any loan that doesn’t require a credit check. That includes payday loans, certain installment loans, title loans, and pawnshop loans. These loans may come with higher fees and short repayment terms.

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Title loan

Also known as a car title loan, this is a secured loan that uses your car as collateral. Failure to pay back the loan could result in losing your vehicle. Title loans usually have short repayment terms of around 30 days. The loan amount is based on the value of your vehicle.

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Pawnshop loan

These loans are easy to get, but they do require you to put up something with resale value in exchange for funds. If you don’t pay back the loan plus interest on time, the pawnshop can sell your item.

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Emergency relief service:

If you’re struggling financially, look into local emergency relief services such as energy assistance programs, local food banks, and other religious or charitable organizations.

What To Do if You Need Money Now

If you need money right now, consider applying for a payday loan. While not a long-term solution, these loans can keep you afloat until your next payday. They’re usually easy to get, have fast funding times, and can be used to cover unexpected expenses or financial emergencies.

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You might want to get a payday loan if you need emergency cash now and don’t have time to wait for another loan or your next paycheck to arrive. This could also be a good option if you have limited credit history or bad credit. But remember, payday loans are not a long-term financial solution and should be used strategically.

Cash advances are slightly different from payday loans. With a loan, you receive the money upfront and must repay it in a lump-sum payment on or before your next payday. With a cash advance, you can take out a small portion of your upcoming paycheck a few days early. Cash advances sometimes come with additional charges like interest or administrative fees.

An annual percentage rate (APR) is a percentage of your loan amount. It includes the interest rate plus any other lender fees — like origination fees. As a result, the APR is generally higher than the interest rate.

Certain factors, like your credit score, can affect your interest rate and APR. The better your credit score, the lower your rates will be — and the less you’ll pay in interest charges over the life of the loan.

Payday loans are designed for borrowers with poor credit or spotty credit history. Because of this, many lenders don’t require a credit check. Or, if they do, they will run a soft credit check that won’t affect your credit score.

Payday loans aren’t available in all states. Before taking out a loan, make sure payday lending is legal in your state. Also, cross-reference the lender’s information with your state’s Attorney General office to make sure they’re legitimate.