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Looking for a short-term loan to help cover an unexpected expense or emergency? Compare the top payday lenders and marketplaces, ranked by customer reviews, time in business, loan options and rates, and funding speed.
Last Updated: May 15, 2022
Payday loans -- also known as cash advance loans, check advance loans, credit access business, deferred deposit loans, deferred presentment, or postdated check loans -- provide immediate cash in dire circumstances.
A payday loan is a short-term loan with small amounts (usually ranging from $100 to $500) that is meant to be repaid on your next payday. Loan terms generally tend to run anywhere from 2 to 4 weeks, although this depends on your lender.
In order to qualify for a payday loan, you must meet the following criteria:
Payday loans are available for borrowers with bad credit. However, you can be rejected for several reasons:
Once you apply for a payday loan (whether in-person or online), your lender will verify your financial information. If you are approved, you can receive your funds in a matter of minutes (if you applied in-store) or the next business day through an electronic transfer (if you applied online).
The amount you can borrow depends on your finances (income and expenses) and your state's laws. Most states cap loan amounts between $300 and $1,000.
If you receive your loan in-store, you will make an appointment with your lender to come in and repay the loan on its due date. You may have to write a postdated check for the full amount plus fees (for in-store loans) or allow the lender to electronically debit the funds from your bank account (for online loans).
If you don't repay your loan, the lender will either cash the check or authorize an electronic withdrawal.
According to The Pew Charitable Trusts, around 12 million Americans take out payday loans each year, which results in around $9 billion in loan fees.
Payday loans can be incredibly helpful when you need cash quickly, but they can come at a high cost: specifically, high fees and interest rates which can quickly land you in debt if you fail to repay your loan.
Payday lenders may charge $10 to $30 for every $100 borrowed, meaning a $200 loan can cost you up to $260; but if you fail to pay on time, you can end up paying more in interest than the original loan amount. Just a note: Most states that allow payday loans will set a cap on loan amounts and fees.
Some fees may include:
And it's even more costly if you don't repay your loan in full and on time: you may have to roll the debt over or re-borrow. Additionally, lenders will continue withdrawing funds from your account, which can result in overdraft fees from your bank account. Eventually, they may try to negotiate a settlement, contact you (or your references) to collect the full amount, or enlist a debt collector who may file a civil lawsuit. If you lose the lawsuit, the judgment against you can lead to wage garnishment or the loss of your assets.
It may seem risky to take out a payday loan, but in a tight financial situation, they can be incredibly helpful:
Because payday loans can be risky if not used responsibly, it should only be used as a last resort -- especially if you know you can't repay the loan immediately.
Below, we list some payday loan alternatives that you can use if you're in need of quick cash:
We recommend using a secure, short-term loan marketplace like MoneyMutual, which can provide same-day funding for borrowers with all credit types.
A payday loan is a type of high-interest, short-term loan that provides funds immediately and are usually repaid on your next payday.
Generally, no. Most payday lenders don't report on-time payments to the credit bureaus. However, if you don't pay your loan back, your credit can be damaged.
Payday lenders usually run some form of credit verification or check your ability to repay, but many do not run a credit check.