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How direct deposit short-term loans work

How to get a loan deposited into your bank account.


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Thanks to the Automated Clearing House (ACH), an electronic network for financial transactions in the US, a short-term lender can deposit approved funds into your bank account rather giving you a check.

There are a number of short-term lenders who offer online loans, and most providers rely on direct deposits to get funds to their customers. You’ll usually apply for these loans online, and you will have to provide details of an account that accepts direct deposits.

How does a direct deposit short-term loan work?

Online short-term loan providers rely on the ACH system to disburse funds and collect payments. When get a direct deposit short-term loan, you’ll have to include your routing number and account number. The lender will use these details to transfer money into your account.

The lender relies on the same information when your payment is due. They request the funds from your bank account on the due date. This can be a problem if you don’t have enough money in your account as the bank could charge you an overdrawing fee while the lender charges you a non-sufficient funds (NSF) fee. Before taking out a loan, make sure you’ll have the ability to repay it on time.

A selection of direct deposit short-term loans you can apply for

Check the websites of any providers you’re interested in to confirm they operate in your state.

Data indicated here is updated regularly
Name Product Filter Values Max. Loan Amount Turnaround time Requirements
OppLoans Installment Loans
1 business day
Direct deposit, meet minimum income requirements, live in eligible state
Comes with the option to change your due date so you won’t fall behind on repayments.
Check Into Cash Payday Loan
1 to 2 business days
Bank account, email address, phone number, US citizen or permanent resident, ages 21+
Plus, get access to check cashing, cell phone top ups, bill pay and more at one of its many storefronts.
Fast5kLoans Short-term Loans Connection Service
As soon as the next business day
Regular source of income, verifiable bank account, US citizen, ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
LendYou Short-term Loans
Same business day to 1 business days
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
Possible Finance Mobile Installment Loans
As fast as 1 business day
Checking account with 3+ months of banking history, $750+ monthly income, live in eligible state, ages 18+
Borrow up to $500 with just a few swipes — but only for residents of 5 states.

Compare up to 4 providers

Features of direct deposit short-term loans

Not all short-term loans are the same. These are the features you should look for when comparing your options.

  • How long it takes to receive your loan. After it’s initiated, a direct deposit takes hardly any time to go through, so even small variances in processing time make a difference. short-term lenders do not take the same amount of time to process applications, and many don’t work outside of business hours or weekends.
  • The loan amount. You can borrow different amounts depending on state laws and your eligibility, but short-term loans typically come with low minimum amounts.
  • Fees. While state regulations oversee the administration of payday loans, you still have to pay attention to the fees charged over the course of the loan. Keep in mind these fees will vary considerably between lenders.
  • Store locations. This isn’t a concern if you’re applying online and want to receive your loan and make repayments via direct deposit, but if you want to deal with your short-term lender in person, its network of store locations will be a relevant factor.

Be on the lookout for loans that claim to be instant

Benefits and drawbacks

  • Multiple options. There are plenty of lenders who offer direct deposit short-term loans, and people who don’t want to carry out extensive research on their own have the option of turning to loan-matching agencies to apply.
  • Apply from anywhere. As long as you can provide the required information, all you need is access to the Internet to apply for a direct deposit short-term loan.
  • Freedom in spending money. You can spend the funds you receive from a short-term loan for just about any legitimate purpose. You can use this money to pay bills, to travel or to simply get by until your next payday.
  • Need a bank account. You need a bank account that is authorized to receive direct deposits. Your lender relies on this account to send you your loan and collect your repayments.
  • High fees. short-term loans tend to charge higher fees when compared to other loans, both in upfront and ongoing costs.
  • Disreputable lenders. Although there are plenty of lenders who are trustworthy, there are some who prey on people with financial issues. Check with your local government to make sure the lender you apply with is abiding by state laws.

If you can’t pay by your next check, consider an installment loan

Is there anything you should avoid?

  • Avoid borrowing more than you can afford. If you feel you might not be able to repay a loan on time, avoid taking one out in the first place. A late or missed payment could lead to additional and costly fees.
  • Avoid skimming the loan offer document. Before you accept the loan, take time to go through its terms and conditions carefully. This should give you a clear picture of the fees and charges you might have to pay under various circumstances.
  • Avoid bad terms. If you have a loan offer that is extremely costly and full of fees, you’re under no obligation to accept the terms. There are lender-matching services that can help you find a better loan.

If you’re sick of scouring the internet for lenders, let a loan broker do the work for you

Are payday loans available in my state?

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