It is relatively easy to obtain a small, short-term loan when you face a financial crisis. Payday loans are one way to get quick access to a small personal loan. Many payday lenders offer you the ability to apply for the loan online. Funds are usually deposited into your bank account within one business day. The term of the loan normally requires that you pay it back on your next pay day.
Step 1
Apply for a short-term loan. Cash advance loans provide a quick way to access cash if you are in need of a small amount of funds within a short amount of time. Payday loans can be a practical option if you know for certain that you can pay back the loan when you receive your next paycheck/direct deposit without having to take an extension.
Step 2
Search for reputable payday lenders online. Cash advance loans or unsecured personal loans are other terms you can use to find payday loan lenders on major search engines. Consider only those payday lenders that offer a secure site for transferring sensitive information and provide multiple ways for loan applicants to contact Customer Service if they have questions.
Step 3
Go to a lender's website to find out how long it has been in business. Read online reviews from other borrowers who have used the services of a particular payday lender. Contact the Better Business Bureau to find out if any complaints have been filed against a lender. Legitimate lenders should have an established history as an online lender, a good reputation and a high Better Business Bureau rating.
Step 4
Compare loan fees and interest rates charged by several payday lenders. Fees vary among lenders; however, finance charges for payday loans are usually between 20 and 30 percent. The Annual Percentage Rate for payday loans, or how much the credit will cost you on an annual basis, averages about 300 percent, although the APR for payday loans in many states can be as high as 408 percent.
Step 5
Read all the fine print. Find out the Annual Percentage Rate for the loan and the date on which you need to repay the loan. A payday lender should clearly outline the interest rates and any other loan fees it charges on the company's website. All terms and conditions of the loan should be posted on the website as well.
Step 6
Check the homepage on a payday lender's website for a security symbol so that you know the personal data you transmit will be secure. Common security symbols used include a lock symbol in the lower right corner of the page, a circle with a checkmark or a padlock symbol, which indicates that a data file is protected by SSL encryption.
Step 7
Complete the online application by answering all questions truthfully. Provide your name, social security number, address and telephone number. Give the account number and routing number for the checking or savings account where you want the money deposited. The application may also request details about your current employment and ask that you give references for the lender to contact in the event that you do not pay back your loan.
Step 8
Fax any additional documents the lender requests. Some payday lenders ask applicants to fax a copy of a recent bank statement, a blank check, one or two recent pay stubs, and signed paperwork. These may be required to verify the information you provide on your online application.
Tips and Warnings
- Educate yourself on payday loan laws listed by state before applying. Visit the Payday Loan Legislation website to browse regulations in the state in which the company is located (see Resources below). Details are provided pertaining to limits on the Annual Percentage Rate that can be charged, as well as other fees. Look for information about other service charges on a payday loan website. Some payday loan applications enter you into memberships for credit repair or finding you low rate personal loans. Make certain that you do not agree to any additional charges being withdrawn from your bank account before submitting your application. Search for a mailing address and telephone number in the lender's contact information. Some payday lenders operate outside the U.S. Lenders in the U.S. are regulated by government guidelines. In order to calculate the Annual Percentage Rate for a payday loan, the lender takes into account not only the interest rate, but also factors in the lender fees for financing the loan. These fees are added to the original principal amount of the loan.
- Credit Abuse Resistance Education, a free financial literacy program, warns that if you can't pay back a payday loan at the end of a two-week period, you could end up owing more in interest than the principal amount that you initially borrowed (see Reference 1). Needless to say, the Annual Percentage Rate and other finance charges, including penalty fees and additional loan fees for extensions, can add up quickly.
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