We can’t always plan for everything in life. Financial emergencies are one such example. No matter how conscientious you are with your money, chances are you will be in need of some quick solutions at one point or another.

If you need some money to solve urgent, smaller-scale financial emergencies, it might be time to apply for a payday loan.

What are payday loans?

While no fixed definition of a payday loan exists, the process of short-term, high-stake borrowing comes pretty close. Payday loans are typically issued in small installments, with $500 being the customary amount. They can be issued by cash, check, electronically deposited into your account, or transferred onto your debit card. 

The money owed is typically paid back in full on the borrower’s next payday. Alternatively, Social Security and pensions are also applicable as a source of repayment.

The Lenders 

  • Are likely to look at a borrower’s credit profile 
  • Review a borrower’s income 
  • Are authorized to withdraw the full loan amount by a specific due date set in the finalized payday loan agreement
  • Are not responsible to evaluate a borrower’s ability to repay the loan based on other financial obligations 
  • Can extend the due date of the loan in some cases permitted by state law 

The Borrowers

  1. Should be 18 and over 
  2. Have a stable source of income 
  3. Be a US citizen or a permanent resident 
  4. Have an active checking account

The loan application, though effortless, does require the submission of the following information:

  1. Your name and date of birth
  2. Your Social Security Number
  3. A legitimate, government-issued form of ID
  4. Your email address, address of residency, and phone number
  5. Information and proof of employment and source of income

Before getting a payday loan

Quick money can be enticing, especially when one’s in dire need. Despite the convenience of payday loans, there are some things to consider before doing so. 

Fees

Depending on the state you reside in, the fees for a payday loan can range from $10 to $30 for every $100 borrowed. This is something to be mindful of in case of a tight budget, as you might have to pay back more than you borrowed within a month. Even if state law permits an extension, you will be charged an additional fee.

Furthermore, if you are unable to repay your loan on time, a lender might charge a late fee. If your bank or credit union becomes involved, the threat of an NSF (non-sufficient funds) charge is also something to look out for.

Prepaid Debit Cards 

The existence of additional fees is a possibility if your loan is loaded onto your debit card. The fees vary from checking your balance to contacting customer support, giving you all the more reason to carefully review your loan agreement.

Alternatives

If you feel as though you cannot afford a payday loan, start thinking of some alternative strategies:

  • Employers and certain non-profit organizations are likely to offer up advances 
  • Friends and family members may potentially help you out of a financial rut 
  • In case of a stable credit history, a bank or a credit union can also offer more favorable alternatives 
  • Tax refunds and salary increases might be a factor to look into and start saving money while you’re at it