Everyone goes through tough financial situations, and there’s no worse feeling than seeing the money dwindling in your account and knowing that you’re not going to make it to payday. If this sounds familiar, then you might be in the position of considering a payday loan. To figure out if this is right for you, here’s the play by play of what a payday loan is, how it works, and how to get one when you’re in a tight spot.
What is a payday loan and how do you know if you need one?
Think of a payday loan like a cash advance from your paycheck. You can borrow money, but it’ll come from the money you’ve already been earning. You might need one if you’re only in need of a small amount of money to get you through the week or month. Having this advance can do a number of things. It can prevent you from having a number of fees like bank overdraft fees if you’re dipping into other accounts or late fees on your credit card payments or rent.
Are payday loans short-term or long-term? If there’s one word you should be associating with payday loans, it’s short-term. Payday loans are a short-term solution, and they should always be treated as such. Payday loans help tide you over for short-term financial obligations (think groceries, one-time expenses, etc.) but should never be utilized in large-financial undertakings.
So, what do you actually need to get a payday loan?
You need to be able to meet the application requirements of the lender with which you’re applying for a payday loan. Examples of these requirements include:
- meet the minimum age requirement which is 18 in most states,
- have an open and active checking account,
- have the ability to show proof of income,
- and have a valid phone number.
Once you complete the application, you’ll receive a lending decision. If you’re accepted for the loan, then you’ll side your payday loan documents and receive the cash. After that, you’ll begin repayments on the specified due date.
When’s the best time to repay your payday loan?
Early! If you’re going to take out a payday loan, then you want to make sure you’re able to pay it back and you either avoid or reduce the number of fees you accumulate. The shorter the length of time you borrow the money for the fewer the fees you’ll accumulate – keep this in mind!
Anything else you should know? Make sure you’re utilizing a reputable lender if you’re seeking a payday loan. Almost all lenders will require you to provide bank account and routing numbers, which isn’t information you want to give out to just anyone. That said, if you’re worried about your credit score, most payday lenders either don’t perform a hard check on your credit or report on-time to credit bureaus, so just be sure to pay your loan back on time so it doesn’t affect your credit score down the line!
Overall, if you’re considering this route to help out with a tough short-term financial situation, just make sure you follow the steps above to ensure success!