Payday Loan Requirements

Payday Loan Requirements

Payday loan requirements vary, but most payday lenders require you to be 18 years of age or older, have a valid bank account, and have a steady source of income to qualify. Nearly all lenders also require proof of employment or other financial information. Protect yourself when getting a payday loan by understanding how payday loans work and the rules in place to protect the interests of consumers. Here’s what you need to know.

Basic Payday Loan Requirements

Payday loan requirements vary by lender, but there are a few minimum qualifications that the best payday loan companies impose.

  • Age: Borrowers must be at least 18 years of age.
  • Bank account: Borrowers must have an active bank account in good standing.
  • Proof of income: Borrowers must have a steady source of income. This can come from employment, self-employment, disability, or other sources.
  • Form of identification: Borrowers must provide a valid form of photo ID.

Payday Loans That Don’t Require a Checking Account

Many lenders will still extend a payday loan if the borrower does not have a bank account. However, the borrower must still demonstrate that their income is sufficient to cover payments. Without a bank account, the payday lender may issue a debit card with the loan balance instead of cash, but this varies by lender.

How Payday Loans Work


When applying for a payday loan, prospective borrowers must provide the lender with personal information, such as their Social Security number, address, phone number, and employer information. Borrowers will also need to give the lender their banking information to deposit the loan into their account and withdraw the repayment amount when it is due.

If the lender approves the borrower, it will give the borrower a check for the amount of the loan. Payment may also be a direct deposit or cash. Borrowers will then have a set period of time, typically two weeks, to repay the loan in full plus any fees or interest that apply. If the borrower does not repay the loan in full, the lender may report the outstanding balance to the credit bureaus, which could impact the borrower’s credit score.

Payday loans are typically due on the borrower’s next payday. However, some lenders may allow borrowers to extend the loan for an additional fee. If more time is needed to repay the loan, borrowers should contact their lenders to arrange an extension before the due date.

If you default on your payday loan, the lender may attempt to collect the debt through conventional means, such as calling your employer or contacting your bank. If they are unsuccessful, they may turn to a collections agency to collect the debt.

Payday Loan Amounts


The typical payday loan is for $500 or less. However, some lenders may offer loans of up to $1,000. The amount that a borrower can receive depends on the lender’s policies as well as state laws.

Because of the exorbitant fees associated with payday loans, borrowers should borrow the amount that they need and can afford to repay. Borrowing more than necessary can result in difficulty repaying the loan and incurring additional fees.

Payday Loan Interest Rates

Payday loans can come with finance charges and fees rather than being interest-rate-driven. The fees on an average two-week payday loan translate to an annual percentage rate (APR) of about 400%. This is nearly 20 times the national average APR for credit cards. That said, many states have laws in place that limit the interest rates and fees that payday lenders can charge. However, not all states have these laws in place, and some lenders in those states charge even higher interest rates and fees.

How Much Does a Payday Loan Cost?

Payday lenders may charge a dollar amount or percentage for each $100 borrowed. In addition to interest, payday lenders may charge a loan origination fee. This fee is typically a percentage of the total loan amount. For example, if you take out a $500 loan with a 10% origination fee, you will owe the lender $550 when the loan is due.

Payday lenders may also charge other fees, such as late fees, if you are unable to repay the loan on time. These fees can add up quickly, so it’s important to be sure you can afford to repay the loan before taking one out.

Payday Loan Alternatives

Because payday loan companies charge high fees, this form of financing is extremely expensive and can lead to a cycle of borrowing. This is especially true for borrowers who rely on payday loans without having the resources to pay them off by their due dates. Before committing to these dangerous terms, consider payday loan alternatives that may be a better fit. You can often obtain payday alternative loans at a credit union or small bank at much lower interest rates than traditional payday loans.

The Risk of Payday Loans

Payday loans are one of the most expensive types of credit available. They are also one of the easiest to qualify for, which makes them appealing to people who are in need of quick cash. However, this convenience comes at a high price.

The fees and interest rates associated with payday loans can make them very difficult to repay. In fact, it’s not uncommon for people to find themselves taking out another payday loan to pay off their first one. This can create a dangerous cycle of borrowing that can be difficult to break free from. Payday loans can also impact your credit score if you default on the loan, making it difficult to borrow money in the future.

For these reasons, it’s important to consider all your options before taking out a payday loan. There are many alternatives to payday loans that are more affordable and less risky. Talk to your financial institution or credit union about other options that may be available to you.

If you are considering a payday loan, make sure you understand the terms and conditions before signing any paperwork. Read the fine print so that you know exactly what you’re agreeing to. And remember, if something sounds too good to be true, it probably is.

CFPB Final Rule

The Consumer Financial Protection Bureau (CFPB) has finalized a rule to protect consumers from being trapped in debt by abusive payday loans. The rule requires lenders to determine upfront whether borrowers can afford to repay their loans and still meet their other financial obligations.

The CFPB rule also deems it unfair and abusive to attempt to withdraw repayment funds from a borrower’s bank account if two consecutive payment attempts have already failed unless the borrower has authorized it. Because the rule imposes minimum federal restrictions on payday lending, states can promulgate additional regulations to protect consumers.

What do you need to get a payday loan online?

To get a payday loan online, borrowers must bring a valid form of photo ID, demonstrating that they are at least 18 years of age. Because loans are approved and disbursed purely online, it is also necessary to have a valid and active email address as well as an active bank account where the lender can deposit funds. As with other types of loans, borrowers must also provide proof of income and other financial information.

What do you need to get a payday loan in-store?

The requirements for getting a payday loan in store may be less demanding than for online lenders. That said, borrowers must still present valid identification and demonstrate they have sufficient income to repay the loan. One notable difference is that some in-person payday lenders do not require borrowers to have a valid bank account.

How much can I borrow with a payday loan?

The amount you can borrow with a payday loan depends on the state you live in as well as the lender’s policies. In many cases, the maximum amount you can borrow is $500.

Does paying back payday loans build credit?

No, payday loans do not help you build credit because they don't often report satisfied loans to the credit bureaus. In fact, they can often have the opposite effect. If you default on a payday loan, it will be reported to the credit bureaus. This can damage your credit score and make it difficult to get loans and lines of credit in the future.

What happens if I can't repay a payday loan?

If you can't repay a payday loan, the lender may try to withdraw the money from your bank account. If they are unsuccessful, they may try to collect the debt through other means, such as calling you or sending you letters. While there are laws restricting payday loan collection practices, many companies ignore these and engage in harassment to recoup loan balances.

If a payday lender is harassing you, you can report them to the FTC. It may also be an option to get a debt consolidation loan, which can provide a lower interest rate and spread the payments out over a longer period.

About The Author

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Kiah Treece

Licensed Attorney and Small Business Owner

Kiah Treece is a small business owner and former attorney with extensive experience in real estate investing and finance. She's passionate about helping readers navigate personal finance topics like banking, credit cards, personal loans, and insurance. Kiah has been featured in industry-leading publications, including Forbes Advisor, Investopedia, and The Spruce.