How to Get a Payday Loan

Three Parts:Picking a Company and Gathering Your MaterialsApplying for a Payday LoanRepaying Your Loan

A payday loan has many names. It can be called a cash advance loan, a check advance loan, a post-dated check loan or a deferred-deposit check loan. The Federal Trade Commission in the U.S. calls it “costly cash”. No matter what you call it, it’s the same thing: a small (usually $50 to $1500) short-term loan that often comes with a very high interest rate. You normally have to pay the loan back by your next pay day. If you can afford to use an alternative means of borrowing money, it is a good idea to do so, as payday loans often come with pricey fees that could ultimately lead you into further debt.

Part 1
Picking a Company and Gathering Your Materials

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    Do not take out a payday loan unless you have no other options. If you can find any other means to raise the cash, do so as once you start getting payday loans, it can be hard to break the cycle. If you cannot pay your payday loan back on time, it could result in higher fees, which could lead you into debt. If you do decide to get a payday loan, make sure that you will definitely have the funds needed to payoff the loan within the time frame that the company gives you (generally two weeks).
    • Payday loans often come with fees that can be hard to pay off. Many people find that payday loan companies will also charge incredibly high interest rates, so avoid these sort of loans if you can.
    • Call a credit counseling hotline to discuss other ways that you can get the money you need without having to take a payday loan. Doing so could save you a lot of money and trouble by avoiding taking out a payday loan.
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    Decide whether you want to get the loan online, or visit a payday store in person. Getting a payday loan online is often quicker, but there is also a higher chance that you will get scammed, as you are not actually interacting with a real person.
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    Pick a payday loan office near you. When picking a payday loan, it is important to find a reputable company that will not rip you off. In general, look for companies that:
    • Are tied to a larger institution. This means that they offer different types of loans (not just payday loans), and that they are backed by a larger company.
    • Do not have incredibly high interest rates. Payday offices are notorious for hiking up interest rates if you do not pay your loan back on time.
    • Are upfront about their loan requirements. If you feel like the lender is hiding information from you, you may want to find a different company.
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    Collect all of the information you will need to apply for the loan. Different companies will require that you bring different information with you when you apply in the office. Take a look at the company’s website, or give the company a call before going in to apply for a loan. Information that payday loan offices often require include:
    • Proof of a steady income (such as payment stubs).
    • Proof that you have a bank account. Some companies ask that you show them that the account has been open for at least a month prior to applying for the payday loan.
    • Contact information for both you and your employer.
    • An ID that shows that you are over 18 years of age, and that you are a resident of the state in which you are applying for a loan.
    • A statement that shows that you have a gross income of over a certain amount. The amount will vary depending on the company. For example, you may need to show that you make over $1000 a month.
    • You may also need to prove that you are not currently in a case of bankruptcy in which are a debtor.
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    Be aware that payday loan companies often do not check your credit scores. Payday loan offices are designed around the idea that you need a little help with cash, which means you may not have the best credit score. However, these companies often will not check your score, so bad credit is generally not a problem.
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    Make sure to bring a blank check with you. The blank check serves as a way for the company to make sure that you will pay back the loan that you have taken out. The check must be blank so that you can fill in the necessary amount once you have talked to the payday officer about the fees that will apply to your loan.

Part 2
Applying for a Payday Loan

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    Discuss the company’s policies with the person you speak with at the payday loan office. When you do this, make sure that you get all of the facts straight, including that company’s specific instructions on how to apply, and their terms of service.
    • Make sure that there are no hidden fees, and be sure to find out what will happen if you do not pay your loan back on time (each company’s policy will differ).
    • Be sure to clearly define what day you will have to repay your loan.
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    Fill out the application. The information you will need to fill out this form will depend on the company you go to and the state in which you live. The necessary information you should bring with you is discussed in the previous section of this article.
    • Some companies will also ask for information about your employer, including where you work, your employer’s name, and a method of contact with which they can touch base with your employer.
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    Talk to the payday office employee about the fee that you will be charged to take out a loan. Payday loan offices will charge a fee to provide you with a payday loan once your application has been approved. The cost of the fee will depend on the company’s policy. The fee may also differ depending on how large of a loan you are applying for.
    • For example, if you were to take out a $500 loan, the company may charge a $125 service fee. Keep in mind that this is 652% APR (annual percentage rate). This is a relatively standard interest rate for payday loan offices, which is why it is generally better to look for a loan elsewhere.
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    Leave your check with the company. Once you have been approved for a loan, you will then be asked to fill out the check that you brought with you. You will have to fill it out for the amount of money that you have applied for, as well as the fee that the company charges.
    • For example, let’s say that you applied for a $400 loan and that the company charges a $50 fee. You would then fill the check out for $450.
    • The company may also ask you to fill out the memo line with a specific memo, such as ‘Payment for payday loan with such-and-such company’.
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    Receive your cash or have funds directly deposited to your bank account. Again, the amount you will receive depends on the amount you applied for. The amount of money you can apply for depends on the state you live in.
    • Some states will allow you to apply for a loan of up to $1000.

Part 3
Repaying Your Loan

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    Pay back your payday loan by your next payday. Most companies require that you repay your loan by your next approved payday. You will not have to go into the office to pay the loan; instead, the company will cash the check you have given them. If you have enough funds in your account to pay off the loan, the transaction will be completed.
    • If you do not have enough funds to cover the amount on the check that the company cashes, you may be charged a fee (the fee may range in amount; companies will commonly charge $15, but others may charge more or less).
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    Talk to the payday loan officer about the deadline for getting enough money into your account. If the company cashes the check you gave them, and you do not have enough funds in your account, you will have a certain amount of time to put the money into your account. Some companies will give you 14 days, while others will give you more or less.
    • If you do not provide the money within 14 days, your information may be handed over to the collections department, at which time you will have to discuss payment with them. Other companies may continue to give you an extension, while also charging you a fee.
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    Consider renewing your loan if you cannot pay it back yet. If you know that you do not have enough funds in your bank account by the time you have to pay back your loan, you can renew your loan instead. You may be able to renew your loan until your next payday, though you may be charged an extra fee.
    • Some states will not allow you to renew your loan—always talk with the payday loan office before considering renewing your loan.
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    Ask if early pay back is an option. Some companies will allow you to do this if you are able to. Doing so will not necessarily reduce your financial charges, but some companies may reduce the applied fees.

Things You'll Need

  • A blank check
  • An open bank account in relatively good standing
  • A steady source of income
  • Identification
  • Proof of employment

Article Info

Categories: Managing Your Money