A payday loan, also referred to as a cash advance or fast loan, is an unsecure financial product that must be paid back with your next paycheck. They’re popular among those needing money quickly or struggling financially.
These loans tend to have high costs and fees, which could lead to a vicious cycle if not paid back on time. They may be suitable for an unexpected emergency, but it’s important that borrowers understand the potential risks and consider other alternatives before borrowing money.
Obtaining a Payday Loan
Most payday lenders don’t conduct credit checks, making them accessible to anyone with proof of identity, income proof and bank account in good standing. Some even provide same-day funding! Before submitting an application though, ensure all information is accurate and complete.
How to Apply for a Payday Loan
You can obtain a payday loan by filling out an online application form with the lender. They will conduct further checks on your account, potentially approving you within 24 hours or the following business day. Afterward, you have the option of receiving funds electronically or in person at the store.
How Much Can I Borrow With a Payday Loan?
A payday loan is an expensive, short-term financial aid designed to cover expenses until your next paycheck. You may borrow anywhere from $100 up to $15,000 and some lenders provide the funds in as little as one business day.
Loans like these are often used to cover essential expenses like rent and utilities, making them popular among low-income Americans. Unfortunately, anyone struggling to make ends meet or without a steady source of income should avoid taking out these loans.
What Are the Disadvantages of a Payday Loan?
Payday loans have a reputation for becoming poor investments for borrowers due to their high cost and potential for depleting savings quickly, according to Pew Charitable Trust. Furthermore, those who cannot make timely payments or default often end up trapped in an endless cycle of fees and interest that leads nowhere but up.
When looking for payday lenders in New York, do your due diligence before signing on the dotted line. If you’re uncertain if payday loans are right for you, speak to a financial counselor who can offer helpful advice and suggest alternative lending sources.
The most popular way to take out a payday loan is by writing a postdated check to the lender for the amount of the loan plus any applicable fees. Alternatively, you may authorize them electronically debit your checking account as well.
Some payday loans allow borrowers to “roll over” the loan by paying an extra finance charge for an extended period. Unfortunately, this practice can lead to an overwhelming amount of debt and make you dependent on payday loans. The Consumer Financial Protection Bureau has warned against this practice.