Payday loans are short-term loans to help when you need quick cash. You can use the money to cover immediate expenses until your next check. The amount you can get depends on your state, but loan amounts are generally between $500 and $1000. These loans are popular in the US, and its estimated that more than 12 million Americans have applied for a payday loan at some point.
Typically, payday loans give you two weeks to repay the loan. You’re supposed to repay the loan in full on your next payday. That’s why it’s important to make sure you’ll have the funds by the time payment is due.
Not the Same as a Personal Loan
A payday loan isn’t the same as a traditional loan from a bank. And your ability to get one of these loans depends on whether or not your state allows them. But if your state does allow these loans, you can apply online or with a local payday lender.
States that allow these loans often set limits. For example, some states limit how much you can borrow. The state might also limit the amount of interest and fees that the lender can charge.
Applying for a payday loan is relatively easy. As long as you have proof of income, then you’re likely to get the loan. If you do the transaction online, you can get the money deposited into your bank account. And if you visit a physical lender, you can likely walk out with the cash.
But before signing anything, carefully read the loan terms. You’re expected to repay the loan plus any finance charges, usually within 14 days of receiving the loan.
The finance charges are usually based on the amount of your loan. The more you borrow, the higher your finance fees. Keep this in mind when applying for a loan. Avoid borrowing more than you know you can easily repay.
Why Do Some Borrowers Prefer these Loans?
Some borrowers prefer the convenience of these loans for several reasons.
First, payday loans are relatively easy to obtain. There’s no credit check or long waiting period. If you have proof of income and a bank account, then you’re likely to get your loan approved. This is usually the best option for people who need quick money or who have bad credit.
Second, these loans are available when there aren’t any other options. Perhaps you need a loan, but you’re hesitant to ask a friend or family member. Or maybe you’ve asked for help, and no one had the means to help. A payday loan is possibly the solution to your problem.
Applying for a Loan
A payday loan can provide emergency funds when you’re in a bind. It’s generally a good source for a loan, as long as you’re sure you can repay the amount you owe.