What is a 1 Hour Payday Loan & How to Apply Today

Chang Fu
August 10, 2020

A 1 hour payday loan is a short-term loan where you will receive the cash you borrowed within 1 hour. The almost instant loan is usually repaid when you get your next paycheck. Because you must apply, get approved, and receive the cash within an hour, most payday lenders and other short-term lenders do not do this. However, some lenders do pull this off and there are two common ways to receive funds quickly:

  • Debit card. Money from a lender can be sent directly onto your debit card. Only certain cards such as Visa or Mastercard may be eligible. The process usually takes a few minutes.
  • Cash. Some payday lenders allow you to pick up your cash on the spot at the payday loan branch. There may be additional qualifications and requirements to receive your loan in cash versus receiving your loan via ACH (automatic clearing house).

Do 1 Hour Payday Loans Really Exist?

Yes, they do exist. Many payday lenders who do not offer 1 hour and fast funding options will tell you this is impossible. But due to technology and friendlier lending, 1 hour payday loans do exist and are widely available.

What is a Payday Loan?

To understand 1 hour payday loans, it’s helpful to know what a payday loan is. A Payday loan can also be referred to as a payday advance, salary loan, cash advance, small dollar loan, or a short-term loan. It is a small, short-term unsecured loan, usually repaid at the borrower’s next payday. Loan amounts can range from as little as $100 to $1,000. Usually some verification of employment or source of income is done as part of the underwriting process but it can vary by the lender. Lenders may also request other documentation. These types of loans are regulated by both federal and state governments in the US and because the annual percentage rate (APR) of interest is high, certain states have unique restrictions or bans on payday loans.

In the traditional retail model of payday lending, borrowers visit a brick and mortar payday lending store and secure a small cash loan with payment due in full at the borrower’s next paycheck. The borrower signs a loan agreement and writes a postdated check to the lender in the full amount of the loan plus interest, fees, and any other charges. On the maturity date of the loan, the borrower is expected to return to the store to repay the loan in person. If the borrower does not repay the loan in person, the lender may redeem the borrower’s postdated check. If the account is short on funds to cover the check, the borrower may now face a bounced check fee or a non-sufficient funds (NSF) fee from their bank plus the costs of the loan. The payday loan itself may incur additional fees or an increased interest rate or both as a result of the failure to pay back the loan on the maturity date.

More recently due to technology, borrowers can complete the entire loan application online. The funds are then transferred by direct deposit to the borrower’s account, and the loan repayment and/or the finance charge / fee is electronically withdrawn on the borrower’s next payday.

Possible takes this two steps further with a friendlier alternative to traditional payday loans. Borrowers can apply, get approved, and receive money in minutes through an iOS or Android mobile. APRs are 2-3X lower than traditional payday loans, borrowers have multiple pay periods to repay the loan, and payments are reported to credit reporting bureaus, allowing borrowers to build credit history. Applicants with bad credit or no credit history can still get approved and repayments can be rescheduled in the app. Possible is a new and better way to borrow.

Payday Loans with Debit Cards

Similar to normal payday loans that you would get online, you can also get your payday loan as a direct card loan by receiving a prepaid debit card. Essentially, if you get a payday loan with a debit card, you are just getting the money in the form of a card that already has money on it. If you do not have a checking account that a normal payday loan could go into, then this prepaid card could be helpful. Just like a normal debit card, this prepaid card will have its own PIN number that you will use upon purchasing something. Once you have used this prepaid debit card, you then have to pay back the balance plus interest, just like you normally would with a normal payday loan. While direct card loans like these might not be the best for everyone, it could be the easiest way for you to access your payday loan if you are without a checking account!

Will the lender check my credit score?

For many 1 hour payday loans as well as other payday loans, the lender will not take your credit score into account. Possible does not use your FICO score when determining whether to lend money to you. That’s why many Possible loan customers have FICO scores below 550. However, most payday lenders as well as other participating lenders will run some type of credit check and request approval to run a credit check, even if they don’t use your credit score. If you’re looking for loans that don’t require any credit checks, no credit check payday loans may be the best option for you.

The credit check they run is usually a soft inquiry or soft pull. A soft inquiry or pull happens in a number of situations which may include

  • Company background check before hiring you
  • Credit card company checks to see if you qualify for a product they have
  • Payday lender checks if you’ve defaulted on other loans before

Unlike hard inquiries, soft inquiries do not affect your credit score. However, they may or may not be found in your credit reports, depending on the credit bureau the lender used to run your soft inquiry.

Requirements for a 1 hour payday loan

Most payday lenders will require a borrower to have valid ID, an active bank account, and proof of income. Most lenders will request proof of income like a pay stub to determine whether you will repay the loan back. They usually won’t consider other sources of income such as cash-only jobs.

There may be additional requirements to receive the loan disbursements in cash on the spot. If the lender does not have a checking account on file to withdraw the money once the loan is due, the lender is taking on additional risk. To receive the loan disbursements on your debit card, you’ll need to have your debit card information and preferably your physical debit card. When the loan is due, funds can also be withdrawn directly from your debit card on file.

With a Possible loan, borrowers can receive money in minutes on their Visa debit card. You’ll need a valid ID, an active online bank account, and a mobile phone to apply for a Possible loan.

Where to get a 1 hour payday loan

You can get a loan online, in person, or on your phone depending on the lender you choose to go with. We recommend to always get an offer from a direct lender – there are many online sites and services that will sell your data and will spam call or contact you. You can also check the NMLS Consumer Access to verify your lender.

Here are a variety of options for you:

  • Payday loan storefront or a “brick and mortar” payday lender. You will need to go in person and ask whether they can disburse the money to you in cash or on your debit card. Be sure to bring the request form or required documentation such as your paystub. In Seattle, Moneytree is an example of a lender with storefronts.
  • Online payday lender. There are a variety of online payday lenders. Be careful when you are searching online as you can come across scams or a disreputable financial service provider. An example of an online payday lender is LendUp.

Payday loan mobile alternative such as Possible. You can apply, get approved, and receive money in minutes through the Possible app. Some payday loan lenders have a mobile app as well but none are as quick, polished, secure, and friendly as the Possible loan app.

Possible is better than a 1 hour payday loan

Download now

Benefits and Risks to a 1 hour payday loan

These types of loans have both benefits and risks. Please do your own diligence and research before getting a 1 hour payday loan.

Benefits

  • Money can be received within an hour and this is one of the only short term cash options. This is perfect for emergencies or unexpected expenses (car repair) when you don’t have the cash right now to pay for it.
  • Many lenders do not require a high credit score and some do not run a full credit check. Therefore, even if you have bad credit or no credit history, you may be approved.
  • There are a variety of different lenders and offers and you can get a loan from a payday loan store, online, or even a mobile app like Possible’s loan.
  • Applications tend to be simple and loan requests fast. You’ll usually just need an ID, proof of income, and an active bank account to borrow the money you need. Although the application process time can vary by lender, it usually ranges from a few minutes to 15 minutes. In contrast, online personal loans, mortgage loans, credit cards, and other types of debt can take much longer to apply for.

Risks

  • 1 hour payday loans have high interest (APR) rates. There are even states where payday lenders charge 700 percent interest! Many lenders charge 500% or more APR for a payday loan. Rest assured, Possible charges much less, ranging from 150-200% APR depending on state. These APRs are still higher than traditional loans like personal loans and mortgages.
  • Borrowers can get into a cycle of debt. Because most payday loans are repaid in full (principal plus interest and fees) on the next payday, if a borrower cannot repay, they may be forced to “roll over” their payday loan and borrow additional money. This can become a vicious debt trap where borrowers cannot get out. At Possible, we believe in improving your financial health long-term so we allow you a couple months to repay and over multiple pay periods. Your repayment is spread out into installments to make it easier for you and reported to the credit reporting bureaus to build payment history. In addition, you can easily reschedule your payments up to 29 days later from the original date – this flexibility goes a long way in allowing our borrowers the space and time to better their financial situation
  • Your credit score will likely go down if you fail to repay your payday loan. Lenders may report whether or not you successfully repaid your loan to the credit bureaus: Experian, TransUnion, Equifax, or someone else. Possible reports all payments – on-time and not – to the credit bureaus so you can build positive credit history as well when you repay your loan.

Alternatives to a 1 hour payday loans

There are many situations where you need emergency cash fast. If a 1 hour payday loan is not the best option for you, here are some alternatives where you can get money fast as well:

Loan from Possible. You can get an installment loan from Possible in minutes. You can apply, get approved, and receive up to $500 on your debit card within minutes or in your bank account in 1-2 business days. You don’t need good credit to be approved and you can repay over multiple pay periods. Paying over time allows Possible to report to the credit bureaus, helping you build credit history.

Cash advance from payday apps. There are payday advance apps such as Earnin or Brigit that allow you to advance small amounts of money (usually $100 initially) before you get paid. However, you’ll need to allow location tracking on your mobile phone and the app will need to have proof of you going to work. That’s how the app determines whether they’ll advance your work paycheck early. Once your payday arrives, the app will get the money it advanced to you directly from your bank account.

Title loan. A car title loan is a secured loan that uses your car as the collateral. If you cannot repay your loan, the lender has the right to claim your car. These loans usually have high interest and fees and can be dangerous, especially if you need your car to get to work. Whereas payday loans are unsecured and has no supporting collateral, title loans use your car as collateral. Make sure you can repay your loan or you risk losing your car!

Pawnshop. Pawnbrokers offer secured loans that are backed by collateral, usually personal property. This can include jewelry and other valuable personal possessions. The items “pawned” or called “pledges” or “pawns.” If an item is pawned, within a contractual period of time the pawnshop may redeem it for the amount of the loan plus agreed-upon interest. The amount of time, and rate of interest, is governed by law and the shop’s policies. If the loan is not repaid within the time period, the pawned item will be offered for sale to other customers by the pawnbroker.

Advance from your employer. Some employers such as Walmart allow employees to get an advance on their paycheck through third party affiliate apps and services. Please research into the terms and specifics of an advance from your employer before getting it.

Borrow from your family. You may be able to borrow money from your family members or close friends. Although it can be embarrassing and is certainly not ideal, depending on your situation, it can be better than getting a payday loan, title loan, or other alternative.

What happens if I can’t pay back my payday loan?

Many lenders such as Possible can help extend the repayment date of your loan and give you a grace period if you are having trouble repaying your loan. Be proactive and contact your lender if you think you will have a late payment. Defaulting on your payday loan is also an option and in some situations, may be the right decision for you.

However, not paying back your loan can result in many consequences which may include:

  1. Extra fees or interest
  2. Lower credit score
  3. Difficulty in obtaining future loans
  4. Ongoing stress and anxiety about repayment
  5. Unfair criminal prosecution

However, there are many strategies and financial solutions to help you manage your situation. For example, Possible believes in trusting our customers and we integrate that trust through our fund recovery and collections process. We believe in doing the right thing for you, our customer, and making sure that even in the stickiest situations, we make the best of it to improve your long-term financial health.

Chang Fu

Chang is an avid writer, among other things, at Possible. He grew up loving reading and writing, creating his own poems and even a book he's now hidden in an old closet, unpublished. His financial experience at a large bank along with his passion for technology to help underserved communities inspires him to write for Possible.

Sign up for our newsletter