Life happens, and there seems to always be something to easily tip our budget and have us spend more than we planned. However, rather than writing a bounced check between financial emergencies or swiping your card when there are insufficient funds, looking into a Payday Loan may be a viable option for you to get the cash you need fast. So if you want to know exactly how these types of loans loans work, we’re spelling it out for you in this breakdown below.
Watch how payday loans work.
What is a payday loan?
Payday loans (also known as cash advances) are small-dollar short term loans that can help get you through until your next payday. Cash advances are often the most affordable option when borrowing a smaller amount of cash, typically under $1,000.
What are the fees associated with payday loans?
Borrowers often choose payday advances to avoid late fees on bills, bounced check fees, and overdraft protection fees. In the case of most of the largest banks, they are currently charging an NSF fee of $361 regardless of the sum your bank covers, and that could add-up! The finance charge on payday loans vary from state to state, but typically range from $15 to $30 to borrow $100. In Alabama and Mississippi, the fees are $17.50 and $20 to $21.95 respectively for each $100 borrowed.
(For example, $100 borrowed for 14 days in Alabama will have a finance charge of $17.50, an APR of 456.25%, and $117.50 due on the repayment date; $100 borrowed for 14 days in Mississippi will have a finance charge of $20.00, an APR of 521.43%, and $120.00 due on the repayment date)
For a more complete schedule of loan amounts and fees, click on the state specific link below:
You may also read How much does a payday loan cost to learn more.
How much are you allowed to borrow with a payday loan?
Payday loans are subject to state regulations and are often limited to less than $1,000. While at Always Moneys Finance borrowers may get a payday loan up to $410 in Mississippi and up to $500 in Alabama, state regulations may influence the total loan amount one can borrow. Borrowers are allowed to have more than one payday loan in the state of Mississippi, but in Alabama, the state limits borrowers to not having more than $500 in payday loans at one time. Lenders such as Always Money Finance may offer other options such as installment loans or auto loans if you already have a payday loan or need more money.
What is required to get a payday loan?
In order to get approved for a payday loan or cash advance, you’ll need to make sure you bring the following:
- Active checking account statement
- Your check book (Some payday lenders, such as Always Money or Quik Pawn Shop, can print a check for you using your bank account information).
- Proof of income (most recent pay stub).
- Proof of residence such as one of the following: utility bill, rent receipt or car registration.
- SSN or ITIN verification .
- A valid government-issued photo ID.
There are also lenders who will accept your debit card account number instead of a check (like most online lenders).
What is the process to get a payday loan?
1) You will fill out an application to determine what amount you are eligible to borrow.
The approved amount will be determined using your income, ability to repay, and whether you are a new customer vs. existing customer, how long at employment, income and source of income, and how long at residence, to name a few.
2) You will be asked to read and sign an agreement required by the Truth in Lending Act (TILA).
3) You will write a check for the amount you are borrowing plus the fee on the loan amount.
If you don’t have a check, don’t worry. Some payday loan lenders such as Always Money Finance can print a check for you when you provide your bank account information!
4) You will be given 2-4 weeks to pay off your loan depending on your payday schedule.
5) When your loan becomes due, you may pay the full amount with cash or your check can be deposited if you do not have a need to re-write your loan.
6) If you feel you need more money at the time of repaying your loan, you may choose to re-write the loan.
Keep in mind that you cannot make a “fee only” payment on a cash advance as you must repay the loan in full to be in accordance with state laws. Only then can you choose to get another cash advance.
Will the payday lender check my credit?
Payday lenders typically do not check your credit with the major credit bureaus; however some may initially check your FICO or Vantage score to ensure it is above a minimum threshold. Typically, they use smaller credit facilities that hold consumer credit history on payday loan borrowers and other types of alternative loans. On an ongoing basis, once you have a relationship with a payday lender they will rely on your performance with them, and may periodically verify your income – it is a “payday” loan after all.
Have more questions about payday loans or think you’re ready to get started? With Always Money, it’s fast and easy to get the cash you need today!
To get started,
- Visit a store near you (Click here to find the store nearest you),
- Call 1-888-618-9217 to get pre-approved over the phone