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Over the past twenty years, payday loans have seen a huge upturn in popularity with quick and simple online applications now able to provide borrowers with much-needed cash in minutes.
With more than 20,000 direct lenders and loan shops now operating in the US, there’s never been a better time for borrowers to compare payday loans online and get a great deal from a trusted lender.
With lenders always looking to add new benefits and features to keep ahead of the competition, how do you decide which payday loan is best for your circumstances?
Fortunately, Credit Raters has put together this handy guide to help you better understand how payday loans work, what they can be used for and how you can make sure you get the best possible price.
How Do Payday Loans Work?
Let’s start with the basics. Payday loans are a form of credit designed to provide you with some emergency cash until your upcoming payday or paydays, depending on the length of the loan.
Whilst they tend to come with higher rates of interest, payday loans are only designed for short term lending meaning that the total amount repayable is actually relatively low.
Whether you’re paid weekly, fortnightly or monthly, your loan will be structured to fall in line with the very same day that you’re paid meaning that you won’t have to worry about payments going out throughout the month.
So how do the features of these payday loans stack up against other loan products? Here are some examples of how a typical payday loan compares.
|Loan Type||Typical repayment periods||Example APR||Typical Credit Limits|
|Payday Loans||1 week -3 months||67%||$1,000|
|Instalment Loans||3-6 months||30%||$10,000|
|Auto Loans||12-18 months||9%||$10,000|
|Guarantor Loans||3-12 months||9%||$10,000|
Am I Eligible For A Payday Loan?
Yes – with so many lenders on the market your chances of finding payday loans online that you’re eligible for have never been better. Each lender brings their unique approach to assessing applications to the market, meaning that just because you don’t meet the criteria for one, doesn’t mean that it will automatically disqualify you from successfully applying elsewhere.
No matter which payday loan you decide to apply for, you’ll need to make sure that the following are applicable to you before you apply:
- You have a US checking account in your own name
- You’re at least 18 years of age
- You’re a permanent US resident
- You’re in permanent employment
Beyond this basic criteria, lenders will want to see that any instant payday loan issued is affordable so it’s important that your income can support the repayments you’re applying for.
How Are The Costs Calculated For My Payday Loan?
Whenever you take out a loan, a number of personal and financial factors will be used to firstly reach a decision on whether to accept you and secondly what credit limit and repayment rates to offer.
As well as breaking down the amount you’ve borrowed into affordable monthly repayments, you’ll also need to pay a small amount of additional interest. Some of the metrics that are used to calculate the amount of interest you’ll pay each month include:
- Your credit score and borrowing history
- The type of payday loan you’re applying for
- The length of your loan
Some lenders also offer discounts for returning customers whilst paying off previous loans can help to boost your credit score for future applications. The more care and attention you place on making timely repayments, the better the payday loan interest rates you’ll get in the future.
Once your online payday loans have been accepted, all of your interest charges will be clearly and transparently listed on your credit agreement so you’ll know exactly where you stand when it comes to your payday loan repayments.
Managing Your Payday Loan
One of the biggest advantages of taking out payday loans online is that most lenders now enable you to manage your repayments and outstanding balance online.
You’ll be able to track exactly when your payments are due to go out and even clear the balance early to save on interest should get paid early.
Here are some quick tips for managing your payday loans responsibly:
- Keep digital and paper copies of your credit agreement so you’ll always have access to the most essential information regarding your loan.
- Never borrow more money than you absolutely have to. Payday loans should be used to tackle emergencies rather than for lavish spending.
- Shop around regularly to make sure you’ve got the best deal. Sometimes consolidating debt into another loan can reduce your monthly repayments.
- If you find that you’re unable to make repayments on time then contact the lender straight away. They may be able to offer helpful advice and assistance in overcoming your issues.
- Choose a shorter repayment period to reduce interest rates. Whilst it might be tempting to spread your loan over a long period, the quicker you can repay it the cheaper the overall costs will be.
Are Payday Loans Available In My State?
Payday loans are currently available in the following 35 states:
- New Mexico
- North Dakota
- Rhode Island
- South Carolina
There are currently 15 states which have chosen to either prohibit payday loans or cap high-cost lending. If you live in one of the following states you’ll need to make sure that the loan type you’re applying for and lender are serviceable in your area:
- New York
- New Jersey
- New Hampshire
- North Carolina
- South Dakota
- West Virginia
The good news is that this doesn’t mean you won’t be able to access other forms of credit. Take a look at our personal loans or instalment loans for more information on state eligibility.
What Are The Pros And Cons Of Payday Loans?
Payday loans are a great resource for emergency borrowing but they aren’t suitable for every circumstance. Here are some key pros and cons to remember when it comes to comparing payday loans online with other credit options.
- Very quick and easy to apply for
- Receive your cash within 24 hours of acceptance
- Ideal for short term financial emergencies
- High rates of interest compared to long term loans
- Smaller borrowing amounts than traditional personal loans
- Failing to keep up repayments can have a negative impact on your credit score
Of course, every single one of our customers brings a different credit history and financial needs to the table, so compare each lender carefully to find the one that ticks all of your boxes.
My Credit Score Isn’t Great. Can I Apply For Payday Loans Now?
Yes! Payday loans are available for those with a less than perfect credit history and can actually help to rebuild your credit score for future borrowing.
As mentioned in the previous section, your credit score will make up only a small part of the overall application. The lenders are mainly focused on your ability to repay payday loans without getting yourself into financial difficulty.
By making your repayments on time and in full, you’ll see your credit score improve as each loan is paid off, potentially opening up even more competitive rates in the future.
Remember that it’s not the be all and end all of you’re struggling to get payday loans online. Guarantor loans, auto loans, and instalment loans can all offer viable lending streams that put less of an onus on your own credit history.
How Quickly Will I Receive My Payday Loan?
If accepted for instant payday loans, many lenders can now arrange for your payday loan to be issued on the very same day that you apply.
If you’ve been caught up in an unforeseen financial emergency and need payday loans now then the great news is that there are literally thousands of lenders on the market ready to say yes. The application takes just a few minutes to complete and, if accepted for your payday loan, it typically takes up to 24 hours for funds to reach your checking account.
What Payday Loan Alternatives Are Available?
If you’re looking for a short term lending solution but don’t feel that a payday loan is suitable for your circumstances then there are plenty of payday loans alternatives to choose from.
Instalment loans work in a very similar way to payday loans online in that you’ll be able to borrow cash quickly to help tide you through a financial shortfall. Unlike payday loans, instalment loans are repaid over a number of months rather than in one go when you receive your next paycheck.
If you need to borrow a larger sum of money than is typically offered by payday loans then personal loans or auto loans could be the answer. Personal loans are typically offered over longer periods with higher credit limits available whilst auto loans are designed to cover the higher costs that come with purchasing a vehicle.
How Can I Apply For Payday Loans Online?
Applying for payday loans now has never been easier with a short, five-minute application being all that stands between you and your loan decision. With each payday loan offering its own set of pricing, features and eligibility criteria, comparing them all one by one would take a lifetime!
Instead, your journey begins with Credit Raters where we’ll use your loan requirements and search our entire panel of lenders on your behalf in seconds.
Choose from a whole host of lenders, credit limits, interest rates and repayment periods, all from the comfort of your own home and complete your short online application form to tell them a little more about yourself.
You’ll need to let your lender know your exact pay dates so you can repay your payday loan on a financially convenient date as well as the checking account that funds will be paid into and repaid from.
Will I Need To Submit Any Documents?
Although the vast majority of payday loans applicants are accepted online without any issues, there are some circumstances when the lender may wish to see documentation before approving your credit.
Depending on the information you can provide, you may be asked for additional documentation to support your application such as a payslip, evidence of income or bank statements. You may also need to provide your social security number during the application so make sure you’ve got this to hand.
Can I Apply For Payday Loans Near Me?
If you’d rather take out your loan face to face in your local area then there are thousands of payday loans shops located throughout the USA, however, you’ll need to ensure that you’ve got plenty of time spare and take all of the relevant paperwork along with you.
Unlike Credit Raters, payday loan shops won’t be able to compare hundreds of loans and will typically offer just a few in-house products which tend to make them quite expensive.
So what are you waiting for? Get a fantastic rate on your next payday loan in minutes by comparing America’s leading lenders with Credit Raters today.