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If you need a loan but don’t have the credit score for a traditional lender like a bank, an alternative option is a direct payday loan. When it comes to applying, you’ve got two basic options: apply with a direct short-term lender or through a loan connection service.
While there are some good loan connection services out there, no single service can claim to have every single direct payday lender available on its network. Plus, if you’re in a rush, getting a payday loan through a direct lender could be faster. A direct payday lender will consider your application, send you your approved loan amount and be in contact until you repay the loan completely.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
What is a direct payday lender?
A direct payday lender, or short-term loan provider, is a lender that directly provides small-dollar loans, rather than working with an outside company. This means that your information stays in one place, but you won’t get a chance to shop around and compare your options.
These lenders offers small-dollar loans that are typically due between 14 and 30 days, typically for a flat fee of around $15 for ever $100 borrowed.
How does a direct short-term loan work?
Depending on the lender you select, you can apply online or in-store, and the application should only take a few minutes to complete. Most lenders process applications quickly and let you know if you’ve been approved soon after. Once you sign the contract, you typically have to repay the loan along with all applicable fees by your next payday.
Online applicants can get their money transferred electronically into their bank account, and in-store applicants can collect their approved funds in person shortly after approval.
Keep in mind that payday loan regulations are not the same in every state. Some aspects that can vary include the maximum amount you can borrow, the term and whether or not you can extend your loan. While direct lenders may be legal in one state, they could be illegal in your home state.
What to look for in a direct short-term lender
Not all direct short-term loan lenders are the same. Pay attention to these points while comparing lenders:
- How easy is the process? Online direct short-term lenders are an easy way to apply for a payday loan, but not all online applications are equally user-friendly. Some lenders might ask you to fax certain documents to verify your credentials, and the overall time these lenders take to review applications, approve your loan and disburse your funds varies significantly.
- Does the lender conduct credit checks? While many short-term lenders don’t carry out credit checks using the big three credit bureaus, a large number still end up turning to Teletrack. If you’re looking for direct short-term lenders who don’t use Teletrack, you’ll have to limit your search to lenders who clearly advertise “no Teletrack payday loans.”
- What fees will you pay? The amount you borrow and the state you live in affect how much you pay in terms of fees, but that does not mean all direct short-term lenders charge the same fees for a given amount. Check what fees and charges come with the loan before you apply.
Pros and cons of a direct short-term lender
- With you from start to finish. When you work with a direct lender, you deal with a single institution throughout the process — from applying to the disbursement of funds and repaying the loan. This can make borrowing much simpler.
- Information is secure. Loan connection services can pass your personal information to various third parties, and there’s no telling how many marketing calls might follow.
- Miss no opportunity. While a number of loan connection services boast extensive lender networks, they might still manage to miss a few good ones. When you’re on your own, you can take the time to look for ones based on your specific needs. You don’t have to worry about missing out.
- Spend more time looking. If you limit your search to direct short-term lenders and refrain from using a loan connection service, you may end up spending more time to find the right loan.
- Disreputable lenders. In the online lending space there is always a chance of finding a disreputable lender. Make sure you check the reputation of the lender before you apply.
- Costs and terms. A drawback of any short-term loan is the cost: You’ll likely pay a high APR that can range from about 28% to 1000% or higher. You also won’t have much time to repay your loan, with most loans due on your next payday.
What should I avoid?
- Avoid taking out more than you can afford. Even if you’re looking for direct short-term lenders because you have an immediate financial need, remember you’ll have to be able to repay the loan. If you’re not sure about your ability to repay on time, you may want to avoid taking the loan out in the first place.
- Avoid late payments. When you make late payments, lenders will charge late fees. And if there’s no money in your bank account on the due date, you could end up paying nonsufficient funds fees, too. Banks and credit unions charge these fees to cover the costs of a bounced check when there aren’t enough funds in your account to cover the repayment.
- Avoid refinancing. Refinancing the loan adds additional costs in the form of charges and fees. You’ll have to repay the original loan amount, the fees accrued from the first loan period and the fees from the second as well.
- Avoid settling. Given that there are dozens of direct short-term lenders in the US, it’s best that you compare a few before making any kind of a decision. See what options you have available and find the right lender for your borrowing needs.
When should I borrow from a direct short-term lender?
You might want to use a direct short-term lender in the following situations:
- You need money today. When you don’t have time to shop around, working with a direct lender that you trust could get you the money in the easiest way possible.
- You want to avoid broker fees. While there are some connection sites that can help you find a short-term loan for free, brokers can charge fees that make an already-expensive product even more costly.
- You want to avoid lender calls. One of the main drawbacks of working with a broker or connection service is that you might receive calls from lenders, well after you’ve taken out your loan.
- You don’t have a bank account. It can be hard to filter for lenders that don’t require a bank account through connection services or brokers — you might have to do that research yourself.
Eligibility and how to apply
For many short-term lenders, applications can easily be completed and submitted online. In order to secure a loan, you’ll need to meet some qualifications, which generally include:
- Be a US citizen or permanent resident.
- Meet the age requirements — usually between 18 and 21 years old.
- Have a steady income.
If all of the requirements are met, there are usually just a few steps to apply. While the actual application will vary by lender, you’ll generally need to:
- Provide your name, date of birth, address and email address.
- Fax your state-issued ID or enter the information if applying online.
- Give details about your employment status and income.
What payday loans are available in my state?
Compare short term loans in your state
Direct lenders vs. brokers
Direct lenders are often cheaper and safer to use than payday loan brokers. That’s because brokers typically work by giving your information to multiple providers to find out which lenders you qualify with. Generally you don’t get a chance to review all of their privacy policies first. Many broker or connection service users complain about getting barraged by phone calls from lenders.
But a broker can be useful if you’re having a hard time finding a loan you qualify for. They might have connections to lenders that you hadn’t heard of or loan options that you weren’t aware of. If you’re new to borrowing, a broker could be a good resource to help you through your first application.
Frequently asked questions
What can I use the money for?
Like all payday loans, you can use it for just about whatever you want. If you’re late on bills, missed your rent payment or have an unexpected emergency pop up, a short-term loan can help cover these expenses.
What is the maximum amount I can borrow?
The state you live in and your monthly income will determine this. The maximum loan amount can also vary between different direct short-term lenders.
How much time does it take to get the funds?
If you apply in-store, you can get the money almost immediately after approval. With online applications, some lenders transfer approved funds on the same day, some by the next business day and some may take up to three business days.
How do I repay the loan and when?
You’ll have to repay your payday loan on or before your next payday. Most lenders take the money directly from your bank account, but some give you other options as well.
How does a late payment or not paying at all damage my credit?
Upon nonpayment, your lender can initiate collection, which in turn would have an adverse effect on your credit score.
What if I repay my direct payday loan early?
If you’ve come into some extra cash and want to pay off your loan early, it’s best to check with your lender. It might charge you early prepayment fees.
What is Teletrack?
Teletrack is a credit reporting service agency that collects information for businesses like short-term loan companies, rent-to-own and furniture stores that offer financing. Your Teletrack report will note your loan history with these types of lenders as well as if your contact information matches up with what you’ve reported in the past
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