You’ve probably heard about payday or paycheck loans before, but how do they actually work? Here, we’ll give you a crash course on everything you need to know, so the next time you have an overdue bill to pay or an unexpected cash emergency that can’t wait until your next paycheck, you’ll have all the information you need to make an smart decision about this popular type of borrowing.
Payday loans, sometimes called payday advances, are an easy and fast solution for a variety of short term cash needs. It’s very easy to qualify for these unsecured loans, even with bad credit, and approval is typically quick and hassle free. There are brick and mortar payday lenders in most cities and towns across the US, but another option that more and more Americans are taking advantage of is borrowing online, where you can apply securely right from your personal computer in the comfort of your own home. You can get instant approval and have your borrowed funds deposited in your bank account the same day, often within just 1 hour.
Who Qualifies for Payday Loans?
- You have to be 18 years of age or older.
- You must be a legal resident.
- You must be employed or have another regular source of income. Whether you are paid hourly, receive a salary or earn commissions, receive military benefits or a pension, you can still qualify for this type of fast loan.
- You must have a bank account that is set up for direct deposit.
What is a Faxless Payday Loan?
Faxless payday loans are the newest, most convenient way to get the cash you need fast. When payday lenders first made their loans available online, most required that you fax off certain documents to them for proof of income and to verify your address, and fax back a signed loan agreement once you were approved. These requirements slowed down the process considerably and increased the time it took for you to receive the money you needed.
In contrast, no fax payday loans only require that you complete a five-minute online application. There is nothing to fax or email to the lender, no credit check, and the entire verification process takes place electronically, over the Internet. Because everything is handled online, you can have fast, easy access to the cash you need 24/7.
How Much Can You Borrow with a Payday Loan and what is the Maximum Length of the Loan?
Payday loans are typically approved for small amounts between $100 and $1,500. The actual dollar limit of the loan depends on the state you live in, because each state creates the laws that apply to this type of short term loan. When you’ll repay is based on how often you receive your regular income, so your loan could be due in one week, two weeks, or even one month.
What’s the Process Involved in Getting a Loan?
- You complete a simple online application that lets you select the amount you want to borrow. You’ll supply personal information including your driver’s license number, length of time at your current address, whether you rent or own, and how to best contact you. You’ll be asked for your monthly income and the source of that income, along with your employment details. Your banking information is also needed so that the funds can be deposited directly into your bank account.
- Click submit and the information on your completed application is verified electronically. Most applicants get instant approval, and within just an hour, the funds can be transferred into the bank account you’ve listed on the application form. On the repayment date, you’ll pay back your original loan amount, plus an agreed-upon loan fee, directly from the same bank account.
Can I Extend my Loan if I can’t Repay on the Due Date?
Rolling your loan over if you need more time is usually not a problem. The applicable fee for your loan will still be due on the original repayment date, and the loan is then renewed for an identical time period. The amount you borrowed and another loan fee will then be payable on your new due date.
Now that you know the basics, the next time you need cash to avoid a late penalty on your rent or a returned check fee from your bank, money for groceries or other necessities, or when an unexpected expense crops up such as car repairs or medical bills, you can easily decide if a payday loan is the answer.