First off, a payday loan is a short-term, high-interest loan, usually $500 or less and often repaid on the borrower’s next payday. However, payday loan structures and fees vary quite a bit by state and by lender - you can find a full overview on payday loans here.
An instant payday loan online is a payday lending option that can be applied for and disbursed online very quickly through your mobile phone. With technology today, you can apply for a payday loan, title loan, or any other loan through your computer or phone and receive your loan directly in your checking account or on your debit card. With an online payday loan, you don’t need to walk into a physical store and you have the flexibility to apply and receive money in the comfort of your home or while on the go.
A Possible loan is the best alternative to a traditional instant online payday loan . With lower annual percentage rate of interest (APR), more flexibility, and the ability to build credit history, borrowers are much better off taking a loan from Possible Finance than a traditional payday loan alternative. Plus, applying only takes a few minutes and you can receive money almost instantly on your debit card or in 1-2 business days in your checking account.
There are numerous banks, financial institutions, and lenders that offer online payday loans. A quick Google search will come up with a variety of ads and options. Make sure you’re working with a direct lender (not a reseller of data) and you can double-check your lender at the NMLS Consumer Access website.
Online payday lenders have similar requirements and will usually need at least:
Some online payday lenders want:
An online application for payday loan can usually take 5-10 minutes. Be sure to read everything carefully and understand the loan terms. Here are a few key terms to know:
Interest Rate. The interest rate of a payday loan should be quoted in an annual percentage rate (APR). According to Debt.org, the interest rate for payday loans are usually 300-500% APR. Depending on your state and depending on your lender, the interest rate will vary. Definitely look to borrow money from lenders with a lower interest rate.
Due Date(s). Most payday loan companies usually expect payment in full on your next payday and usually within 2 weeks. The date in which the loan must be repaid is the due date. Some alternatives to payday loans such as Possible Finance have repayments split into multiple installments. In those cases, there are multiple due dates and each installment has a different due date. With Possible, due dates can be flexibly changed within the app depending on your needs.
Fee. The interest fee on a payday loan is the most common type of fee. It’s often quoted as some dollar amount for every $100 borrowed. For example, the fee can be $15 for every $100 borrowed, meaning that when you repay the loan, you will need to repay $115 when borrowing $100. There can be other fees associated with a payday loan, including debit card fees, origination fees, etc. Be sure to take into account the full costs of getting your loan from each lender before choosing your lender.
Maximum loan amount. This is the highest loan amount the lender can approve you for. You can choose to borrow an amount up to this maximum loan amount. The maximum loan amount can be affected by state laws. For example, the maximum loan amount in Washington is $700.
The online payday lender you choose might run a credit check but it depends on the lender. There are multiple types of credit checks:
Soft inquiry. Some payday lenders will use a soft inquiry with one of the credit bureaus to check your credit history. It may not be with a large credit bureau like Experian, TransUnion or Equifax. Instead, it could be a smaller credit bureau or subprime credit bureau. In either case, the lender will look at your credit history profile to help their underwriting process.
Hard inquiry. It’s unlikely a payday lender will use a hard inquiry. Hard inquiries are more common when applying for a credit card, a personal loan, or a mortgage. Hard inquiries, especially a lot of them in a short span of time, can hurt your credit score.
Be sure to read the fine print and understand what credit check you may or may not be agreeing to when you’re applying for an online payday loan. Just because a lender says “no credit check is required” doesn’t mean they won’t run a credit check on you if you agree to.
Here are some other options depending on your financial situation:
Online title loans. These loans can be dangerous but if you know you can pay back the loan, it can sometimes be cheaper than a traditional payday loan. Just remember, if you can’t pay back the loan, the lender can seize your car which is used for collateral. Title loans are still high interest and short-term so if you can qualify for better financial products, stay away!
Payday advance apps. There’s a few apps out there that will advance you cash early before your payday. Payday advance apps can come in handy, especially when you’re tight on cash. But remember, you are basically borrowing against yourself - you’ll need to pay the money back on your payday so you’ll have an underwhelming paycheck day! In addition, payday advance apps may include membership fees, subscription fees, tips, and other fees you’re not thinking about. Plus, they don’t have to tell you an APR because they’re not considered a loan under most state regulations!
Personal loans and credit cards. If you have the credit score for it (usually 650 or higher), personal loans and credit cards are a much cheaper option than an online payday loan. The annual percentage rate of interest (APR) is often under 36% and there’s a variety of lenders out there to choose from. The application process can be longer and it may take you a few days to receive the funds but these options are often far less predatory than online payday loans.
Installment loans. A Possible loan is an installment loan but there are other lenders that also installment loans. These loans are often up to a year in length and carry APRs that are higher than personal loans and credit cards but lower than online payday loans. Installment loan lenders may or may not check your credit score. However, check your lender carefully and make sure you’re not paying a huge APR - if you are, you could be making almost all interest payments during the first few months of the loan!
Pawnshops. Pawnshops will offer you a secured loan in which if you can’t repay back the loan, the pawn shop will keep the asset you “pawned” to get the loan. Interest rates are high but usually not as high as an online payday loan, which is unsecured. Make sure you’re able to repay the loan from a pawn shop or you may never get the valuable possessions you pawned back again!
Friends and family. Borrowing from friends or family can be cheaper and easier than online payday loan options. Be sure to draft up an agreement (you can find these online!) to hold both sides accountable and not get yourself into a sticky situation with those you care about. Approach any loan from a friend or family member as if from a lender or financial institution. Keep your promises, repay on time, and maintain a healthy relationship with who you’re borrowing the money from.
You’re not alone if you can’t repay your online payday loan. There’s many people in the US in your shoes and you’ll expect the lender to contact you in increasing frequency and severity. At some point, the lender may pass your loan to a collections agency to follow up with you further.
Not paying back on time can have these consequences and more:
Don’t take out a loan if you don’t think you can pay it back. These consequences aren’t worth it!
However, there are a few things you can do such as asking for a grace period or an extended payment plan, settling, or rolling over (in some states). Beware of abusive collection practices and know the laws in your state so the lender cannot take advantage of your situation.
You can read more about what to do if you can’t repay a loan and how Possible Finance approaches defaults here.
Payday loans are regulated at the state level rather than nationally. Each state is different and some states have outlawed payday loans completely such as New York, New Jersey, and Georgia. There’s a lot of information online about the regulations in each state at paydayloaninfo.org.
Online payday loans can be a useful form of short-term borrowing that’s fast, easy, and makes ends meet in an emergency. But research your lender carefully, know the interest you’re paying, and understand all your options before taking out a loan. Online payday loans are more expensive than credit cards, personal loans, and many installment loans so getting money quickly into your hands, regardless of your credit score, has a high cost!
Check out Possible Finance if you have bad credit and need money quickly. Get up to $500 even with bad credit, repay over multiple months, and build credit history!