Payday Loans
Payday loans are short-term and expensive cash advances that are meant to fill a temporary gap between paychecks. This page describes the way payday loans work, their general cost, how our matching service works, state regulations that may influence availability, risks to beware of, and safer options you should consider before borrowing.
What Are Payday Loans?
A payday loan (also known as cash advance or single-pay loan) is a small, short-term loan that is supposed to be repaid on your next payday or within a very short time (usually 7-31 days). The lenders usually approve based on your income and bank details as opposed to a detailed credit history and this makes payday products attractive to borrowers who require money urgently or those with limited credit.
Key features:
- Short term (days to a few weeks).
- Minor principal (usually $100-1,000 by state regulations).
- The fees are usually imposed as a fixed percentage of the amount borrowed (e.g. 10-30 per 100).
- Repayment may be through ACH debit, post-dated check or debit-card authorization.
- The short-term fee can be converted into APRs that are very high.
How Payday Loans Work
- You apply online or in-store. Lenders require simple ID, bank account or debit card information and income evidence. Numerous online applications require minutes.
- The lender analyzes income and bank data. This can be done by soft check or by examining bank deposits instead of conducting a complete hard credit check.
- In case of approval, you get a lump sum. Deposits can be made to your bank account or to your debit card based on the rails of the lender and your preferred way.
- The repayment occurs on the due date. The lenders usually withdraw the loan and fee on your account or anticipate a single payment on the agreed date. In case you are unable to repay, there are lenders that permit rollovers/renewals in which you pay the fee to continue the loan. This can actually add up to cost.
How Our Matching Service Works
We match borrowers to partner payday lenders and short-term loan providers so that you can compare offers in a short period.
We Are Not a Direct Lender
- We are neither a bank nor a direct creditor. Application information is gathered to find possible partner lenders who can provide payday or short-term loans.
- Final underwriting, APRs/fees, and funding are done by partner lenders. We do not dictate prices or approval regulations.
- Before sending your information to partner lenders, you must give your consent. The issuing lender provides final loan documents.
Why Offers Vary by State and Borrower Profile
- State licensing and caps: States impose maximum charges, maximum loan amounts and rollovers or installment conversions. This is why availability and terms are based on the lender and your state.
- Income & bank history: Lenders vary in their direct deposit requirements, bank deposit history, or debit-card verification.
- Checks and paperwork: There are lenders that demand identity or income documents that may affect the speed of approval and loan conditions.
Payday Loan Requirements
Common specifications in most online stores and marketplaces:
- Age 18+ (or older in some states).
- The U.S. residency in a state where the lender is located.
- Active checking account or debit card (to deposit and repay).
- Evidence of earnings (pay stubs, bank deposits or payroll verification).
- Authentic ID and contact details.
There are those lenders who prequalify with soft credit checks and those who do not need a credit check at all, but they usually verify income and bank information.
Bank of Wedowee Is the Right Choice
We are designed to assist you in comparing the short-term loan offers in a responsible manner:
Funding Speed and Payday Loans Online
How Fast Can Funding Happen?
Approved applicants may receive same-day funding, however, timing depends on a number of factors:
- Funding method: Debit-card pushes or real-time rail services may provide funds quicker (usually same day). The ACH deposits have bank ACH cutoffs and can be settled on the same day or the following business day based on the time submitted.
- Verification: Instant bank verification services may accelerate identity and income checks; manual document checks increase time.
- Lender processing windows: There are those lenders who fund 24/7 and those who fund only during business hours. In-store funding can also be instant and many storefront chains provide it.
What Can Retard the Process?
- Lack or absence of documentation (ID, bank details).
- Delayed or unsuccessful micro-deposits on bank accounts.
- State-specific compliance checks or licensing checks.
- Applications received after ACH cutoff times (bank-specific).
Payday Loan Costs and Fees
Payday cost structure is typically charged as a flat rate on every 100 dollars borrowed. In order to know the actual cost, turn the fee into an APR. Even when the flat fee appears small, short loan terms make the APR figures very high.
Common fee examples and APR equivalents.
| Fee per $100 borrowed | Loan term | Equivalent APR (approx.) |
| $10 per $100 | 14 days | ~182% APR |
| $15 per $100 | 14 days | ~391% APR |
| $20 per $100 | 14 days | ~522% APR |
Important:
Extra charges: late charges, NSF/return charges and collection charges may add to your balance in case of a failed payment. Read disclosures carefully.
State caps: most states limit fees and maximum loan amounts; some prohibit payday lending. Check local rules prior to application.
Rollovers/renewals: a payday loan can be rolled over and over again, or just the fees paid, and the cost can easily get out of control and lead to a debt spiral. CFPB studies point to the fact that rollovers add a lot of money to the overall expenses.
Bad Credit Payday Loans and No Credit Check Searches
Is It possible to get Payday Loans with bad credit?
Yes. Most payday lenders focus on income and bank history instead of a traditional credit score, and some storefront and online lenders claim to offer no credit check approvals to qualified borrowers. With that said, creditless loans are usually charged higher to cover lender risk.
What No Credit Check Generally Means
- No hard FICO check: the lender does not necessarily conduct a hard credit check, so your credit score does not get affected immediately.
- Other checks: the lender will normally check bank deposits, income and payment history to determine risk.
- Higher cost tradeoff: cheaper underwriting based on credit score is usually associated with higher charges and reduced loan values.
Risks, Rollovers, and When Payday Loans Can Be Expensive
The Debt Cycle Risk
Payday loans may lead to a debt trap where the borrower is unable to pay the principal on the maturity date and has to pay the fee to renew or re-borrow. The recurrent payment of fees without decreasing the principal adds to the total cost and may result in collections. According to CFPB research, rollovers tend to generate high cumulative fees.
Extensions and Rollovers State-Dependent.
Not all states permit rollovers or lenders to provide extended repayment plans. But even in places where permitted, rollovers tend to add a lot of cost. Always verify whether extensions are allowed and what are the alternatives required by law.
Practical tips, when you are unable to pay off a payday loan:
- Talk to your lender prior to the due date.
- Request a payment plan or conversion to an installment loan (some states/lenders are required to do so).
- You may want to request your bank to provide a small overdraft limit or a temporary payment plan, but you should consider the cost.
FAQs
Responsible Borrowing
Payday loans may provide a fast source of money, but they are frequently expensive and may cause financial stress in the long run when repeated or rolled over. Never sign a loan agreement without reading it to the end, comparing the APR and total repayment, and looking at cheaper options where possible. When you decide to do it, make sure you have a licensed lender, verify state and lender regulations that govern your loan, and inquire with your lender what to do in case you cannot repay.