How Do Payday Loans Work? Everything You Need to Know Before Applying

how do payday loans work

Today’s payday loans have historical roots dating back to the 5th century. Although these historic loans differed from those we use today, they featured the same general idea.

Today, payday loans are more popular than ever. Despite their rising popularity, many people still have questions about these loans.

How do payday loans work? Who is eligible to receive them? Continue reading to learn everything you need to know about payday loans before applying for one.

How Do Payday Loans Work?

A payday loan is a short-term, high-interest loan. As the name suggests, they’re meant to help people who need money before their next payday.

During the application process, you’ll need to supply proof of income and a checking account number. These will both be verified by the potential lender. You will also need your social security number and a state-issued ID.

If applying in person, you should receive a decision on your loan within about fifteen minutes. It doesn’t take much longer for the money to be deposited into your bank account. Some lenders have an option for the loan to be made in cash.

If applying online, you should receive a decision almost immediately. The money typically isn’t deposited into your account until the following morning, however.

To make sure you can pay back the loan, you will need to do one of two things. At a store, you will be required to sign a check for the amount of your loan. Online, you’ll need to permit an automatic withdrawal from your bank.

Your loan is typically due on your payday. Some lenders allow you to wait two weeks to a full month before paying back your loan. Make sure to ask about your repayment options before agreeing to the loan.

What is Required to Get a Payday Loan?

To be approved for a payday loan, you will need to make at least $500 a month in guaranteed income. Income doesn’t have to come from a job. It can also be in the form of disability, social security, or any other income source.

You will also need a state ID and social security number. Payday loans are only available to adults over the age of eighteen. Even if a sixteen or seventeen-year-old has a job, they can’t receive a payday loan.

Why Might You Not Be Approved for a Payday Loan?

Not everyone is approved for a payday loan. A few reasons you might not be approved include:

  • You don’t make enough money
  • You don’t have an active checking account that’s been open at least one month
  • You have recently filed bankruptcy
  • You don’t live in the state where you are applying for a loan
  • You’re active military
  • You have other loans out (including student loans, in some cases)

If any of these situations apply to you, that may be the reason you aren’t approved for a payday loan. It’s important to note federal law doesn’t allow the active military to receive short-term, high-interest loans.

What Fees Should You Expect?

The fees charged on payday loans will vary between lenders. The national average is between $15 and $20 in fees per $100 borrowed for a two-week loan. The prices for a monthly loan are usually a little higher.

If you borrowed $500, for example, you could expect to pay an extra $75 to $100 in fees. The fees are added to the amount you borrowed. The total amount you’d need to pay back in this scenario would be $575 to $600.

If you’re unable to pay, those fees are charged a second time. If the loan was due after two weeks, but you couldn’t pay you will be charged another $75 to $100 in fees.

How Much Can You Borrow?

The amount you can borrow will depend on two factors. The most obvious factor is your financial health. You won’t be allowed to borrow more than you can reasonably pay back on your following payday.

Each state will also have its own set of laws on how much a person can borrow. In both Kansas and Missouri, the legal maximum is $500 for payday loans. If you earn enough, this would be the total amount you’re allowed to borrow at a time.

Who Should Get a Payday Loan?

Payday loans are typically meant for use in emergencies. They are a good option if you need a little money to pay rent or utilities on time, for example. Or, if you need to replace a tire but don’t have savings to cover the costs.

A payday loan isn’t meant to be used in place of other loans. These types of loans wouldn’t be useful in place of student loans, mortgages, or car loans.

A few situations where a payday loan might be right for you include:

  • You need a few bucks to cover rent or utilities
  • You need a minor vehicle repair (like a new tire or brake pads)
  • You need a minor home repair (like a new faucet or door locks)
  • You need grocery money today but don’t get paid for three days
  • You need money to cover medical co-pays in an emergency

In short, payday loans are appropriate for people who need a small amount of cash quickly. These loans are ideal for people who don’t have other borrowing options, such as close friends or family members.

Do You Need a Payday Loan?

Payday loans are great options for people who need a small amount of money quickly. They aren’t alternatives to other loan types, and not everyone qualifies for them.

Now you know the answer to “how do payday loans work?” If you need a payday loan, contact us today. We’d be more than happy to assist you with your short-term financial needs.

Your Guide to Bad Credit Payday Loans

bad credit payday loans

You’re in a pickle.

You’ve got bills to pay, rent to cover, and food to put on the table. But after a hectic holiday season, last month’s paycheck won’t cover it all.

Worse still, a poor credit rating means traditional sources of financial support are unavailable.

The situation isn’t great, but you’re far from alone! Consumer debt’s hovering at around $14 trillion these days. Households near and far are struggling to make ends meet. Increasing numbers of people are being forced to take on debt.

You might be reluctant to do the same. However, bad credit payday loans are one form of debt that offers a viable solution to these sorts of financial problems.

Would you like to learn more about them? Well, the following guide should help.

Keep reading for everything you need to know about payday loans.

What Are Bad Credit Payday Loans?

Let’s start with a definition.

Now, you might be able to deduce what these loans entail from the name! All the same, allow us to go into a bit more detail about what’s involved.

Bad credit payday loans are a form of short-term debt that’s available to people with poor credit scores. People borrow small sums of money (think under $1000) to be repaid upon receipt of their next paycheck.

Catches to know about include the fees and high-interest rates that usually accompany these loans. Because of the financial risk involved for the lender, these loans are expensive in nature.

Anyone who applies for one should ensure they’re able to repay it, in full, by the scheduled date.

We’ve got more info on the key considerations for accessing payday loans later in the article. Make sure you check them out!

Advantages of Payday Loans

Payday loans have a number of advantages to know about. We’ll go through a few of the main ones here:

1. They’re Quick and Easy

You’ll struggle to find a loan application easier than that of a payday loan.

The entire process can be completed within 24 hours or less!

That’s good news for anybody in serious financial trouble. If you’re in need of rapid access to funds, then payday loans certainly deliver.

2. There’s Little Paperwork

One reason these loans are so simple is through the lack of paperwork involved.

Go to the bank for a loan and you can be bogged down in confusing documents to complete. There’s none of that here. In general, there’s literally nothing by way of paperwork to worry about.

Occasionally you’ll be required to submit certain documents and details with an application. More often, though, you escape the bureaucratic process entirely.

3. There’s a High Chance of Approval

The nature of a bad credit loan is that denial of your application is unlikely.

After all, most loans are refused on the basis of excessive risk.

Lenders run a credit check and make a decision to approve based upon their findings. Traditional lenders, such as banks, take credit seriously and deny applications if the score is too low.

That isn’t the case with these payday loans though, where bad credit is expected.

4. Credit Checks Don’t Appear on Reports

Payday loan providers run softer credit checks than traditional lenders.

The purpose? To confirm the information that’s of particular interest. As we’ve noted, lenders aren’t so concerned with your credit score. They do, however, want to make sure you can repay the loan without defaulting.

To that end, they’ll seek to verify the authenticity of your bank account and job. The good news is that these checks won’t show up on your credit reports.

Payday Loan Considerations

Payday loans aren’t right for everybody. Here are a few considerations to help you decide if it’ll be right for you.

1. The Expense

Payday loans don’t come cheap.

Interest rates are high versus other loans, which means you end up paying back far more than you borrowed. Ensure you have the means to repay your loan in full come your next paycheck.

If you can’t, then you’ll end up in further financial trouble in due course. Expect added fees and potential legal action if you fail to pay off the debt.

2. The Potential Loan Sharks

Not all payday lenders are reputable.

Unfortunately, a number of ‘organizations’ set up to prey upon vulnerable people in financial distress. Desperate for finance, someone is more likely to agree to a loan with extortionate interest rates that leaves them unable to repay the loan.

Fees follow and the debt grows; the shark pockets the money.

Avoid this eventuality by doing your due diligence before signing the dotted line. Research the lender and read reviews to ascertain their reputation.

How to Access Payday Loans

Okay, let’s skip ahead.

You’ve weighed up the pros and cons and have decided a payday loan is the best way forward. How do you access them?

Thankfully, assuming you’re old enough (the age varies between states, but it’s usually 18 or 21 years old) and have a job, there’s not a lot separating you from the funds!

More often than not you’re only expected to provide proof of income and a form of ID. With an active bank account (and possibly an email address), the money should be accessible to you within hours.

Be aware that not everyone is granted a bad credit payday loan.

Lenders can refuse applications based on numerous factors, including excessive levels of risk, state law infractions, and/or current loans being repaid.

Time to Decide on Bad Credit Payday Loans

Bad credit payday loans can be a lifeline for anyone having financial trouble who can’t access traditional sources of financial support.

However, they can also be a mystery for someone who’s never heard of them. Alas, ignorance is a recipe for negative implications in this domain; we hope this article has proved enlightening!

In Kansas City and interested in applying for a payday loan of this nature? Contact us today to get the ball rolling.

Payday Loan Requirements: What Do I Need to Get a Kansas City Payday Loan?

Too many people, debt is a bad word. But during an emergency, quick access to cash can help you get out of a pinch.

Payday loans are a common short-term loan option when you’re looking to get cash quickly. Payday loans requirements vary by lender, but here’s how to get approved for most payday loans.

What is a Payday Loan?

A payday loan, sometimes referred to as a cash advance, is an unsecured loan offered by alternative lenders. The loan isn’t linked to your paycheck.

Instead, the term ‘payday’ comes from the idea that quick access to cash can hold you over until your next payday.  Payday loans are always short term and for small amounts.

Since funds are usually intended to give borrowers instant access to cash between paychecks, some loan terms require repayment to begin in just two weeks.

Payday loans are common. Around 2.5 million Americans take out payday loans each year to cover a variety of unexpected expenses and emergencies.

Because of the convenience of payday loans, fees are higher to cover the cost of the transaction.  Borrowers for payday loans vary from poor to decent credit.

How Much Can I Borrow?

Payday loans range between $100 and $500. The average payday loan is $350 with a term of just two weeks.

Some states, like California, cap payday loans at just $300. In Kansas, the maximum allowed payday loan is $500.

Borrowing what you can afford to repay is more important than getting the amount you want. If you don’t repay the debt within the agreed-upon loan period, you’ll be charged penalties that could exceed the amount of the initial debt over time.

Payday Loans Requirements

When you go to apply for a payday loan, there are standard items most lenders want to see. Take a look at the following list of typical payday loans requirements to help you prepare for your cash advance:

Government Issued ID 

Bring a government-issued form of identification when applying for a Kansas City payday loan. Examples of accepted identification include a state-issued ID card, driver’s license or a passport.

Photo ID is required and should match the name on other supporting documents. Never bring expired identification to apply for a loan.

You must be 18 or older to apply for a payday loan.

Social Security Number

Bring your social security card when applying for a payday loan. A copy may be acceptable instead of a physical card.

Call ahead to the payday loan location to see whether an original social security card is required.

Verifiable Income 

Payday lenders don’t require good credit to issue a payday loan. Instead, they ask that you have a steady paycheck to prove you can repay the loan.

Bring proof of income when applying for a payday loan. Proof of income varies depending on your employment circumstances.

In general, pay stubs are requested. Copies of checks or other electronic payments from an employer might also be accepted.

Checking Account

In order to qualify for a payday loan, you must have an active checking account. Closed checking accounts don’t allow lenders to verify your identify or draft payments from your account.

Personal Check

When you apply for a payday loan, a personal check is held as collateral. In most situations, borrowers write a check for the full amount of the loan including a lending fee.

When the loan comes due, the lender cashes the check. If the borrower is unable to pay, the loan term can be extended with a new lending fee.

Things to Know Before Getting a Loan

It’s important to understand how loans work before pursuing a payday loan. Payday loans are intended to be quick sources of emergency cash.

They are not a regular means to pay off personal expenses or debt. Payday lenders make access to cash quick and easy to help borrowers get out of emergencies.

The small amount of the loans equals that of a paycheck so that repayment is simple. With traditional loans, credit history is extremely important.

Payday lenders focus less on credit history to grant everyone the opportunity to take care of financial emergencies. The cost of giving access to high-risk borrowers, or people who may not repay the debt, is higher interest rates and fees.

These fees help cover the expense of issuing loans to borrowers who don’t pay back the loan. Around 46 percent of payday loan borrowers don’t repay their debt.

The cheapest way to borrow is to repay your debt on time. Constantly renewing a payday loan is a sign you borrowed more than you can afford to pay back.

Loan Terms

Payday loan terms usually last between two and four weeks. Plan ahead before getting your loan.

If you’re confident in your ability to repay within the two or four week period, then a payday loan is a great option for getting instant access to cash.

Emergency Cash Relief

Payday loans can save the day in any financial emergency. Because they’re issued in small amounts, payday loans are easier to repay than conventional loans.

As long as borrowers understand payday loans requirements, these loans can help them emerge from a financial crisis quickly. Borrowers who don’t understand the terms of a payday loan can easily become overwhelmed.

It’s much easier to borrow a small amount of money then get another payday loan at a later date than it is to borrow too much and struggle to repay. Payday loan default goes on your credit report and destroys your relationship with the lender.

Take advantage of the payday loan opportunities near you. Visit our location to apply for your next payday loan.

Wondering If Installment Loans Are Right for You? Click Here to Learn About Them

installment loans

Almost four in 10 Americans — that’s how many US adults would have a hard time covering a sudden $400 expense.

If that bill goes up to $1,000, only 40% of adults would be able to shoulder it with their own money.

So, what about the rest? 16% said they’d put a $400 expense on their card, while 10% would borrow money from friends or family. A total of 5% would get a loan, either from a bank or a payday lender.

If you find yourself in this situation, know that bank or payday loans aren’t your only option. There are also installment loans that can help tide you over until your finances are a bit better.

The question now is, what is an installment loan and how exactly does it work and differ from payday loans? Is it a good choice and if so, how can you secure one in Kansas City, KS or Kansas City, MO?

We’ll answer all these questions in this post, so be sure to keep reading!

A 100-Word Primer on Installment Loans

An installment loan is a fixed-amount, lump-sum loan that has a fixed repayment period. You’ll make several repayments towards the loan over this agreed-upon period. Each of these payments is an installment, hence the term “installment loan”.

By that definition, mortgages and car loans are also types of installment loans.

The loan repayments already include a portion of the principal and interest. What’s more, reputable KCK and KCMO lenders allow you to set an easy repayment schedule. Depending on what you’re most comfortable with, you can make payments twice a week, twice a month, or once a month.

Regardless of which payment schedule you choose, you’ll have a fixed payment amount. Meaning, you don’t have to worry about sudden increases, so long as you pay on time. If your first payment is $50, then all the other payments you’ll make will also be $50.

How an Installment Loan Works

Let’s say you need to borrow $500 (principal) and pay it back over a period of three months (loan term). Let’s also say that the lender will charge a monthly interest rate of 30%. Think of the interest rate as their “service fee” or compensation for letting you borrow money.

The lender will then divide the $500 into three (months), so you’ll pay $166.67 toward the principal alone. They’ll apply the 30% interest rate on that, so your monthly interest payment will be $50. Adding the two together, your total monthly loan repayment will be $216.67.

If you schedule a once-a-month payment, you’ll pay $216.67 once a month, for three months. You may find it easier to make smaller repayments, so you can also schedule repayment of $108.33 every two weeks.

Note that this is only an example, and that interest rates still vary. Don’t worry though, as reputable lenders are transparent about their rates. They don’t have “hidden” costs, as they put all the details of their services into writing.

Installment Loan vs Payday Loan

Personal installment loans, like payday loans, give you quick access to cash. If you get approved, you can have the money within the same day you apply for the loan.

Payday loans, however, usually need to be repaid by the time you get your next “paycheck”, hence the term “payday”. So, they have a much shorter repayment term, typically within two weeks or a month. This is also why payday loans have smaller loan amounts.

In Kansas City, KS and surrounding areas, lenders can only legally issue up to $500 for a payday loan. The same goes for Missouri payday lenders, including those operating within KSMO.

With an installment loan, however, you can borrow more money since you can pay it back over the course of a few months. And because it’s a longer-term loan than a payday loan, you may be able to secure a lower interest rate.

If You Need More Money than a Payday Loan Could Provide

Payday loans, although helpful, could be too small to cover your needs, with their cap set at $500. This surely won’t be enough to cover sudden home repairs like a leaky roof, which in Kansas City, could cost up to $850!

Medical emergencies are even more expensive, with the average ER bill in 2017 amounting to $1,389. That doesn’t even include prescription medications and other hospital fees.

In such cases, a personal installment loan may be a better choice than a payday loan. After all, reliable installment loan lenders in KSK, KSMO, and surrounding areas let you borrow up to $2,000.

If You’re More Comfortable Spreading Loan Repayments over a Few Months

Even if you need a loan smaller than $2,000, it may still be better to opt for an installment loan’s longer repayment term. Since you’ll make smaller loan repayments, you’d have an easier time coming up with the money. This could be helpful if you come across other money troubles before you could pay your loan in full.

You Can Extend the Repayment of an Installment Loan

Granted, you can also extend a payday loan term, but the costs could be higher than with an installment loan. That’s because the interest rate and other charges will apply to the entire loan amount. If you took out a $500 payday loan, the related extension fees will apply to that entire amount.

Whereas most extended installment loans only take into account the current amount owed. In this case, the additional charges will only apply to what’s left of your loan. If your unpaid balance is just $150, then the lender would apply the interest rate just on that amount.

Choose an Installment Loan for Easier, Hassle-Free Repayments

There you have it, your ultimate guide on Kansas City installment loans and what makes them a good choice. If you need to borrow a bigger amount that’s still easy to pay back, consider an installment loan. This way, you can get the cash you need now without worrying too much about delayed or missed payments.

Ready to solve your financial woes with a quick-approval Kansas City installment loan? Then please feel free to send your online installment loan application now! We’ll get back to you as soon as we receive and review your application.

When Will My Loan Be Paid Off? 8 Tips for Paying Off Payday Loans Faster

when will my loan be paid off

Every year, 12 million Americans borrow money via a payday loan. These unsecured personal loans get you money quickly when you need a bridge until your next paycheck.

But if you don’t pay them off in the established time, you may find yourself rolling the debt into another payday loan. You’ll spend more in fees and extend your debt. It can leave you wondering, “When will my loan be paid off?”

Focusing on paying down the debt quickly can save you money and get you back on track financially. Check on the terms of the loan, and find ways to put as much money as possible toward the loan to pay it off.

Use these tips to pay down your payday loan faster.

1. Limit What You Borrow

Payday loans aren’t meant to serve as long-term financial solutions. They’re designed for short-term financial situations to help meet your immediate financial needs. Relying on payday loans to handle your regular expenses can put you into a cycle that’s difficult to break.

Borrow only what you truly need to handle your financial emergency. If you’re spending the money on groceries, clothes, or similar items, you’re borrowing too much money. By limiting what you borrow, you’re better able to pay back the money on time.

2. Ask for an Extended Payment Plan

It may seem counterproductive to ask for an extended payment plan when you want to pay off your loan faster. But if you’re having trouble affording your payday loan, this option can cut down on additional fees.

If you fail to meet your payday loan obligations, you’ll likely face extra fees and interest. You might end up taking out an even larger payday loan. The amount you owe can continue climbing instead of decreasing.

When the lender is willing to work with you on a payment plan, you can break up the amount owed over time without the higher fees. It can keep you from falling behind even more.

3. Find Extra Money in Your Budget

You likely feel like your budget is maxed out, but most people can find places to cut back and free up money. Grocery shopping, entertainment, eating out, and splurges at the store are often areas where you can cut back.

You don’t want to miss out on fun, but putting yourself on a temporary spending freeze can help you get caught up and get your loan paid off quickly. Think of ways you can curb extra spending for now.

Pack leftovers for lunch and put what you would spend on lunch out toward your loan. It’s easy to spend $10 for a meal even at a fast food restaurant. That gives you $50 a week just for your work lunches to pay down your loan faster.

If your budget is already tight, consider selling things around the house for cash. You may even have luck picking up free items from the curb and selling them for cash. Put that money directly toward your payday loan.

4. Get a Part-Time Job

The idea of a payday loan is to use your next paycheck to cover the payment, but sometimes you can’t pay it all off as planned. Your current paycheck needs to go to other bills, and you may not have the extra to put toward the loan payment.

Consider getting a second job to get through your current financial situation. Working extra hours may seem like a pain, but it’s a temporary sacrifice to improve your finances.

Since the second job is new income you didn’t previously count on for bills, put your entire paycheck toward your payday loan. Continue paying your normal bills with your regular paycheck.

If you’re tempted to spend the money from your part-time job, deposit it into a different check account so you don’t see it with your normal income. Apply it to your payday loan as soon as you receive the money.

5. Make Extra Payments

Even small extra amounts can cut down on your loan repayment time. If you get a little extra money for working overtime, as a gift, or for any other reason, use it to make an extra payment toward the loan.

When you make your regular payments, round them up to a higher amount. If the required payment is $282, round it up to $300. You won’t miss the extra money, but it helps cut down your loan balance faster.

6. Refinance With a Different Loan

If you’re struggling to pay off your payday loan, consider refinancing that borrowed money with another type of loan. An unsecured installment loan can give you more flexibility on your repayment term. You may get a better interest rate and avoid some of the fees you have with a payday loan.

7. Utilize an Assistance Program

Sometimes your financial situation is more difficult, and you need some help. Check for local programs through the government or nonprofit organizations designed to help people with financial difficulties.

You may qualify for assistance for various expenses, such as rent or utilities. Consider visiting a local food bank to help stock your pantry.

Financial help in other areas can help you keep up with your loan payments. It can help you get back on your feet and improve your financial situation in the long run.

8. Borrow From a Friend

Borrowing from friends and family can be risky. If you can’t afford your payday loan payments, can you afford to pay back your friend? You don’t want to hurt your personal relationships over money.

Still, getting a temporary loan from a friend or family member may be an option if you’re struggling with your payday loan. If your personal lender charges interest, it’s likely a smaller amount than your loan fees. You may also be able to pay back the money over a longer time period to make it easier to afford.

When Will My Loan Be Paid Off?

The answer to, “When will my loan be paid off?” depends largely on your financial situation and your commitment to paying off the debt. Coming up with extra money to pay the loan on time or ahead of schedule puts you in a better financial situation.

Contact us if you need a payday loan. We can help you get the funding you need, and with these tips, you can pay it off quickly.