Many of us run into tight financial spots from time to time, and sometimes we need a little extra cash to cover our bills before our next payday. Payday loan companies offer short-term solutions to occasional situations where you need a little extra cash for unexpected and unplanned expenses, such as if your car dies and you have to take it to the mechanic, or your child gets sick and you haven't budgeted for a doctor bill.
Payday loans are extremely high-interest loans. You should only consider them when you have no other option. They are not meant to be long-term or to cover planned expenses, such as purchasing a new car. If you choose to take out a payday loan, make sure you choose a reputable company that has your best interests in mind and offers competitive rates and fees. Our top three services – 100 Day Loans, NetLoanUSA and FaxFreeCash – are the best payday loan options. For more information about payday loans and financial advice to help you avoid needing a payday loan, have a look at our learning center articles as well.
Before considering a payday loan, you will want to know about the lending company and make sure you know everything you can about interest rates, fees and paying off your loan. Another thing to keep in mind is the fact that payday loans are heavily controlled by state regulations, so all lending companies are obligated to comply with local laws. Elements such as the loan amount, interest rates and repayment terms vary by where you live. Below is the criteria we considered when reviewing payday loan services and the crucial elements you should know before getting a payday loan.
The main features of a loan are also the most important: the amount, interest rates and fees. Because payday loans are intended to be short-term and small, the maximum amount of most payday loans is around $1,000, and most first-time applicants are not approved for the full amount available; a few hundred dollars is more common. Most services charge a fee per $100 borrowed or a percentage of the total loan. These fees generally range from $10 to $30 per $100 borrow, so you've already added 10% to 30% to your loan even before interest, which can add up.
The interest rate (APR) can be confusing, because it represents the interested paid over an entire year, but the terms of a payday loan almost never go an entire year. Common APRs range from 300% to 800%. Some loan services offer decreasing loan rates over time if you have a good payment history. Some services advertise potential APRs as low as 35%, but this is the exception. Be wary of interest rates over 1,000%.
Some services on our lineup are direct payday loan lenders, while others process your application and then set you up with lenders with whom you complete your contract and from whom you receive your funds. Most services approve applicants with bad credit and approve payday loans with no credit check, but that is often up to the lender.
Ease of Use
Because a payday loan itself can be tricky, the ease of use in applying for and receiving your funds is something to consider. We looked at the company websites along with the application processes. We also looked at the time frames for approval of your application, which range from instant approval to a few hours. Every service on our lineup offers next-day direct deposits into your checking account, and some services offer same-day deposits if you complete your application by a certain time of day and meet all requirements.
The term for payday loans is typically 14 days, as their purpose is to supplement your finances between normal paychecks. Some services offer longer terms, such as a month or 90 days. Keep in mind that the longer you have your loan, the longer you pay interest.
When payment on your loan is due, the vast majority of payday services automatically debit the checking account into which the service originally deposited your funds. This means that you don't have to worry about processing a payment, but you do need to make sure the funds are in your account to avoid overdraft and late fees. If you can't make your payment when it is due, some services offer an extension. Other services offer a loan rollover, which puts the remainder of your loan onto a new loan contract. Both of these options may come with additional fees and commitments to the lender, so make sure you understand what you are agreeing to before you accept an extension or rollover.
Help & Support
Reliable support with your loan is crucial in case you run into any issues with your loan, especially if you can't make your payment and need to know your options. Most services offer a couple of ways to contact customer service. With most services, you can reach a representative by telephone or complete an online email form. Some services offer live chat as well.
Payday loans can be a risky choice because of the high interest rate and short time period in which you can pay them back. When you have no other option, at least make sure that you're well educated on payday loans, and only agree to interest rates you can handle and terms with which you can comply.