If you are considering applying for a payday loan, it’s important to understand the potential risks and consequences. Payday loans can be a useful way to cover unexpected expenses, but they also come with high interest rates and fees. Here are five things to consider before submitting a form for a payday loan:
Can I Afford to Pay Back a Payday Loan?
When considering whether to apply for a payday loan, it is essential to assess your ability to repay the loan on time. Payday loans are designed to be short-term loans, typically due on your next payday. If you are unable to repay the loan on time, you may find yourself in a cycle of debt, taking out new loans to cover previous ones.
Before applying for a payday loan, it is a good idea to have a repayment plan in place. Consider how you will repay the loan on time, and what you’ll do if you’re unable to make the payment. Some lenders may offer payment plans or extensions, but these typically come with additional fees and interest.
To assess your ability to repay the loan, start by looking at your current income and expenses. Consider whether you will have enough money to cover the loan amount plus interest and fees. If you are not sure, create a budget to see how much money you have left over each month after paying for essential expenses like housing, utilities, and food.
It is also essential to consider whether you have any upcoming expenses that could make it difficult to repay the loan on time. For example, if you have a car repair or medical bill due shortly after your payday loan is due, you may find it challenging to repay the loan and cover those expenses.
Finally, be aware of the due date for the loan repayment. Typically, payday loans are due on your next payday, which means that you may only have a few weeks to repay the loan. If you’re unable to repay the loan on time, you may be subject to additional fees and interest charges, and your credit score could be impacted.
Am I Eligible For a Payday Loan?
To be eligible for a payday loan, you must be:
- A U.S. resident
- Over the age of 18
- Able to prove a steady income of at least $800 per month
- The owner of a live checking account for the loan to be deposited into
You will not need to worry about your credit rating. Whilst a better credit score will maximize your chances of approval, Pheabs is open to accepting all credit histories, so you should still submit a form with us if banks have turned you down because of poor credit. When you submit a form for a payday loan, this will have no impact on your credit rating and it is free to submit a form too.
What Are the Terms and Fees for Payday Loans?
Before accepting a payday loan, it crucial to understand the loan terms and fees associated with the loan. Payday loans typically come with high-interest rates and fees, which can make them a costly source of borrowing. Different lenders in different states will have different terms and fees. Be sure to read the terms properly.
The interest rate on a payday loan is typically much higher than other types of loans, such as personal loans or credit cards. The annual percentage rate (APR) on a payday loan can be as high as 400% or more, depending on the lender and the state where you live. The high-interest rate means that the cost of borrowing money can quickly add up, especially if you are unable to repay the loan on time.
In addition to the interest rate, payday loans may come with other fees, such as:
- Origination fees
- Application fees
- Late fees.
These fees can increase the cost of borrowing and make it more challenging to repay the loan on time. It’s essential to review the loan agreement carefully and understand all of the fees associated with the loan.
To determine whether a payday loan is worth the cost, calculate the total cost of the loan, including interest and fees. Compare this to the amount you need to borrow and consider whether the cost of borrowing is worth it.
What Are the Loan Repayment Terms For Payday Loans?
The loan terms for a payday loan refer to the conditions and requirements set forth by the lender. These terms typically include the amount of money you can borrow, the interest rate and fees charged on the loan, and the repayment terms.
The repayment terms for a payday loan typically require full repayment on your next payday, which means that you may only have a few weeks to repay the loan. Some lenders may offer extended repayment options or installment loans, but these options may come with additional fees and interest charges. Be sure to understand the repayment options available to you and choose the option that works best for your financial situation.
Different states put limits on your repayment terms. This table explains the loan terms for different states:
|Alabama||10 – 31 days|
|Alaska||Min: 14 days|
|California||Max: 31 days|
|Colorado||Min: 6 months|
|Delaware||Max: 60 days|
|Florida||7 – 31 days|
|Hawaii||Max: 32 days|
|Illinois||13 – 45 days|
|Indiana||Min: 14 days|
|Iowa||Max: 31 days|
|Kansas||7 – 30 days|
|Kentucky||14 – 60 days|
|Louisiana||60 days or less|
|Michigan||Max: 31 days|
|Minnesota||Max: 30 days|
|Mississippi||Under $250: maximum of 30 days; $250 – $500: 28 – 30 days|
|Missouri||14 – 31 days|
|Montana||Max: 31 days|
|Nebraska||Max: 34 days|
|Nevada||Max: 35 days; up to 90 days allowed if the initial agreement provides for installment payments and is not subject to extension|
|New Hampshire||7 – 30 days|
|New Mexico||Minimum maturity period of 120 days|
|North Dakota||Max: 60 days|
|Ohio||Min: 31 days|
|Oklahoma||12 – 45 days|
|Oregon||Min: 31 days|
|Rhode Island||Min: 13 days|
|South Carolina||Max: 31 days|
|South Dakota||Not Specified|
|Tennessee||Max: 31 days|
|Texas||7 – 31 days|
|Utah||May not exceed 10 weeks|
|Virginia||Min: 2 pay periods|
|Washington||Max: 45 days|
|Wisconsin||90 days or less|
|Wyoming||1 calendar month|
Should I Use a Broker to Find My Payday Loan?
Brokers are companies that connect borrowers with lenders, and they may offer services such as comparison shopping, loan matching, and prequalification. This enables you to get a fast, objective quote that considers the whole market.
Using a broker can have some benefits, such as saving time and effort by allowing you to apply to multiple lenders at once. Additionally, brokers may have access to lenders that you wouldn’t be able to find on your own.
While some brokers may charge fees or commissions for their services, Pheabs does the job for free. Use our online form and we will connect you to your ideal lender fo free, with no credit check required.