All You Need to Know about Payday Loans

Do you need an instant loan? At times like these, payday loans are always there to your rescue – being one of the most easily accessible and familiar loans today. According to research, around 12 million Americans take payday loans every year. These loans offer instant small-scale cash. What makes them easily accessible is that you don’t have to go through a long-term loan process to access these loans. Just with access to fast payday loans online, you can quickly fulfill your instant small-term cash needs.

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But is this all that makes payday loans different from regular time-taking loans? Certainly not! Additionally, these loans also have a higher fee. You need to pay this fee with the loan amount on the next payday. Once your payday loan starts, there’s also a great chance you’ll be hooked with a loan cycle. Now there’s nothing wrong in that, as long as you know how these loans work and how you can manage them. For that, you need to understand everything about payday loans. So without further ado, let’s explore these loans below in detail.

The 101 of Payday Loans

Payday loans are the short-term unsecured loans that you can take instantly. However, with the ease to immediately accessing these loans, you are also bound to pay them back by the next payday. The good thing about repaying these loans is that you only have access to a small amount of cash with these loans. Maximum, payday loans offer you a loan of $500 or less. Hence, it’s not a huge struggle to pay back the amount of these loans by the time of the next payday.

However, this isn’t all that you should know about payday loans before getting one yourself. For a more precise idea, let’s explore various crucial aspects of these loans.

Applying for the Loan

Similar to other types of loans, you can also apply for payday loans through various means. However, these means usually depend upon the payday company you choose. Two ways to apply for payday loans are:

  • A physical brick-and-mortar location
  • An online application

Getting and Repaying the Loan

Getting a payday loan is extremely easy. While some lending companies may need some extra details, most of them require one or two documents, and you’re good to go. Just offer the least of information and access a payday loan on the next day. It’s that simple!

Next up is the process of repaying the loan, once you have obtained one. How do you that? Well, there’s no technical or prolonged process there too! You have to offer a specific payment option, i.e. a postdated check or bank authority to the lenders (after your loan is approved). This check or bank payment should include the full amount, interest, and fees of the payday loan you receive. Altogether, you can consider these payday loans to be more accessible than other credit cards and bank loans.

Note: Make sure your check doesn’t bounce, or you pay the full payable amount on the payday. If you aren’t able to do that, a loan cycle will continue for the next payday – increasing the interest rate throughout the process.

Why Get a Payday Loan?

Now another question you that occurs before getting one of these loans is that ‘why should you get one in the first place’? Of course, it’s an easy loan to obtain compared to other types of loans, but how do you know if you need one? Well, if you need instant cash, then considering a payday loan is a good idea. Besides, there’s no other way to access instant money. Although you have to pay it back and the interest rate/fees can be high at times, but there’s no one else giving you instant money too, right?

Usually, there are limited situations when people consider getting a payday loan and filling their instant needs. These situations can include:

  • Last-Minute Shopping

Sure, getting a loan for shopping can seem like a dumb option. Especially when that shopping can wait, there’s no need to get a loan. However, some instances do occur when you have to do last-minute shopping for holidays or any other occasion. At these times, payday loans come to rescue you!

  • Managing Emergency Needs

Emergency needs or expenses can occur at any time. They’re like a surprise no one awaits, but they still arrive from time to time. So how do you deal with them? No worries, payday loans are always there to help you in such situations. Most people consider these loans in emergency expenses like car breakdowns or medical treatments that aren’t easy to handle in a monthly budget.

  • Bad Credit

Bank loans or other loans don’t work with a bad credit score. There’s a great chance you won’t get a loan if your credit score isn’t great. However, payday loans require the least financial health and credit details from borrowers. Therefore, when no other loan is accessible, people with bad credit opt for payday loans.

 How much do Payday Loans Cost?

Moving forward with payday loans, it’s time we explore the fees and interest rates of these loans. Since these loans are financed by private payday companies (instead of bank or credit card companies), their criteria are also different. The rates/fees of these loans depend upon the various state regulations.

A two-week loan costs can usually be $10-$30 on every $100 payday loan; some companies also charge a fee as low as $15. However, this is only the criteria of a two-week payday loan, which isn’t very common. Instead, most of the time the payday loans are rolled over, creating a loan cycle with a new charge every time.

Now if we talk about the two-week payday loans, their annual interest rate (APR) can fall at a range of 391% to 521%. These calculations are based in similarity to the credit card, auto, and mortgage loans. Yet, the payday loans’ interest rates are higher than that of the other types of loans.


In the end, we can say that payday loans are highly accessible and equally hard to fulfill at times. What makes these loans dangerous is the different fees, interest, and payday criteria of each lending company. If you don’t have a clear understanding, there’s a great chance you won’t be able to manage to pay back this loan. So before accessing this easy loan, it’s crucial first to explore the lender company requirements.

Once you know what company you’re taking the loan from and how the process will proceed further, you can easily handle repaying it afterward. Besides, we all might need a payday loan from time to time, so why not access it correctly and avoid future complications?

Interesting related article: “What is Interest Rate?