What Are Payday Loans?

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On average, adult Americans have between $11,200 to $57,800 in their savings accounts. That may sound like a lot, but 56% of Americans aren’t able to cover an unexpected $1,000 bill.

If you’ve had a huge expense come up and aren’t prepared for it, then you might be panicking. Where are you supposed to pull all that money out from anyway?

Personal loans might take too long to get. But did you know about payday loans?

What are payday loans? How can you use them, and what are the pros and cons that come with them? Read on to find out!

What Are Payday Loans?

Payday loans are also known as cash advance loans. As the name suggests, you’ll need to have a source of income to get this type of loan since your paycheck is used to repay the amount once your employer disburses the money.

These loans are considered a type of short-term loan since they’re usually repaid within a few weeks or a month (whenever your next paycheck is due). Whereas with a traditional personal loan, it can take years to repay in full. Because they’re short-term loans, payday loans also tend to have lower amounts.

Do note that not all states allow payday loans.

Woman Excited Looking at Payday Loan Offer

What Do You Need to Get Payday Loans?

Besides having a source of income, there aren’t a lot of requirements. You’ll need to be at least 18 years old, have an active bank account, current residence, and valid ID. Some lenders also require a minimum monthly income.

This means that if you have no or poor credit, you may be able to borrow money.

How Can You Use Payday Loans?

The beauty of payday loans is you can use them for anything you want. There are no restrictions, so whether you use the cash for groceries, rent, gas, or anything else, you won’t be limited.

Pros of Payday Loans

If you’ve got some loan choices available, then you might be wondering what the benefits of payday loans are. Here are some of the main pros.

You Can Apply in Person or Online

You can apply for payday loans at a brick-and-mortar lender. But if you don’t want to leave the comfort of your house, this is possible too.

There are lots of online lenders you can browse without wasting time or gas. And once you find one you like, you can apply for online payday loans right on your computer.

The Application Process Is Fast

The application isn’t long and complicated, so you don’t need to spend much time filling it out.

More importantly, it won’t take long for the lender to get back to you. In most cases, you’ll usually hear back faster than traditional loans.

With traditional loans, it can take several days to weeks for lenders to give you a decision.

You’ll Get Money Fast Too

Not only will you receive quick responsives from lenders, but you can also get the funds fast. If there’s an emergency, once you accept the loan offer from a lender, funds can be deposited in as little as 24 hours

This can ease your burden and stress, especially since traditional loans take a while for approval and disbursement.

There Are No Credit Checks

If you have bad credit or none at all, then you might already know how difficult it is to get approval for personal loans or lines of credit. It can feel impossible to secure much-needed funding.

What’s great is payday loans for bad credit are available. So long as you have a steady paycheck, it’s pretty easy to get.

You Can Roll Over Your Loan

If your next paycheck is smaller than expected and you can’t cover the entire loan amount, you may be able to roll over the loan. This means you just pay some fees and you can use your next paycheck to cover the rest of the payday loan.

Otherwise, repayment is a one-and-done situation. So there’s less stress when compared to monthly payments with a traditional loan.

Cons of Payday Loans

Payday loans certainly come with a number of benefits, but there are also drawbacks. Here are the main ones you should be aware of.

Interest Rates Are High

If you think credit card interest rates are high, then wait until you see the ones attached to payday loans.

Some states don’t have rate caps; for example, before one was introduced in Ohio, payday loan rates stood at 677%! In the state of California, the typical interest rate is 460%.

But if desperately need money and are certain you can immediately pay off the loan with your next paycheck, it can save you in a pinch.

Rollovers Can Add Up

While rollovers are handy when you can’t pay back your advance in full, they can quickly add up. In addition to the fees, you’ll need to pay the high interest amount, which will only grow the longer you extend repayment.

Are Payday Loans Right for You?

The answer to the question “what are payday loans” is they’re a quick and easy way to get fast cash when you’re in a bind. However, they’re not without their pros and cons, so make sure you carefully weigh them up before you get one.

If you do decide they’re right for you, then the next step is to take out a loan from a reputable company. We at First Financial are here to give you the options you need fast!

Ready to get started? Then apply for a payday loan now!

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