There’s a reason payday loans are so popular: they’re fast, easy, and affordable. A payday loan is a short-term, high-interest loan that you can take out to cover your expenses until your next paycheck. The best part? You only need to provide your name, address, and Social Security number.
The bad news is that payday loans are often abused. They’re perfect for people who don’t have enough money to cover an emergency expense but aren’t able to wait three or four weeks for their next paycheck.
How a payday loan works
A payday loan is a short-term, unsecured loan given to people who need money quickly. Borrowers must pay back the loan, plus interest and fees, within 14 days. Payday loans are available from private lenders and some banks. Borrowers must have a checking account and an acceptable credit score to get a payday loan. Borrowers can also use a payday loan to cover unexpected expenses, such as car repairs or medical bills.
How the loan is repaid
Repaying a loan is a regular process that must be followed in order for the loan to be considered repaid. There are a few different ways that loans can be repaid, but the most common is by either paying off the loan in full each month or making larger payments over time. Repaying a loan can take many different forms, but it must all be done in accordance with the terms of the loan agreement. If repayment is not done according to the terms of the agreement, then penalties may be levied against the borrower.
Fees and APR
Looking to understand how much your credit card fees and APR will impact your borrowing costs? Check out our guide to credit card fees and APR. It covers everything from introductory rates to ongoing fees and explains the different types of APRs. This information can help you make an informed decision when selecting a credit card and help you compare cards side-by-side.
Where to find a payday loan
If you need a quick cash infusion but don’t have time to wait for a check to clear, a payday loan might be the solution. However, these loans are often expensive and have high-interest rates. Before taking out one, research your options and compare interest rates to find the best deal.