Compare payday loans

This article was fact-checked and reviewed by Brad Stevens, a business loans consultant with an MBA in finance. Content has been updated for 2021.

What is a payday loan?

Payday loans are small loans, usually under $1,000, meant for emergencies. Unlike other loans, lenders don’t require you to have good credit — and many won’t check your credit score with the big three credit bureaus.

Since payday loans are repaid within seven to 31 days, they have a high annual percentage rate (APR). In many cases, your APR can be 300% or higher. But some of the best payday lenders have more reasonable fees.

The application can be done online from a mobile device or computer, although some lenders also allow you to apply over the phone or by visiting a store.

To repay your loan, you will either need to provide your lender with access to your bank account for an automatic transfer or sign a post-dated check.

Are payday loans legal?

It depends on where you live. Some states prohibit payday loans by enforcing a cap on interest rates. Other states restrict how much payday lenders can charge or impose other regulations to protect borrowers.

Unfortunately, many states allow payday lending without enforcing heavy regulations. This can put borrowers at a disadvantage and allows lenders to charge fees that lead to APRs of 700% or higher.

You can browse payday loan regulations by state to learn more about your state’s laws surrounding payday loans.

How much do payday loans cost?

Payday loans generally have fixed fee from $10 to $30 for every $100 borrowed. However, it varies based on your state laws and the amount you borrow.

Your loan agreement should outline the total cost of your loan as well as any additional fees. If you don’t understand the costs, speak with a customer service representative before signing.

Learn more:5 places to find low-cost payday loans

Looking for a specific amount?

Payday loans are meant to cover small expenses — as low as $50.

5 common eligibility requirements

Like the application process, the specific requirements you need to meet will vary by lender. However, most lenders have similar criteria:

1. Open checking account
2. Employed or receiving regular benefits
3. Regular source of income
4. US citizen or permanent resident
5. At least 18 years old

And while payday loans are meant for bad credit, meeting these eligibility requirements doesn’t guarantee that you will be approved for a loan.

Can I get a payday loan without a bank account?

Some lenders don’t require you to have a bank account to apply. But many require you to have a bank account even if you choose to pick up your loan at a store.

Alternatively, there are also lenders that offer prepaid debit cards that won’t need to be connected to a bank account.

Common payday loan fees

These are the most common fees when you borrow a payday loan — but the exact fees will depend on your lender and your state.

• Financing fee. The amount you pay to borrow a loan.
• Rollover fees. An additional fee if you choose to pay off your payday loan with a new loan.
• Late payment fees. A fee charged if you are unable to make a payment.
• Returned check or nonsufficient funds (NSF) fees. A fee if your check doesn’t clear or a lender is unable to withdraw your payment from your bank account.

Where payday loans fall short

Payday loans have some of the shortest terms and highest fees, which make them one of the most expensive forms of credit.

• Smaller loan amounts. How much you can borrow depends on the state you’re in, but most lenders offer loans between $100 to $1,000.
• High fees. Payday loans have much higher APRs than other forms of credit. Most states regulate how much a lender can charge, but this may still result in an APR over 300% — and sometimes over 1,000%.
• Short loan terms. Because payday loans are designed to be short-term solutions, you generally won’t find a loan that extends beyond six months, although terms differ by state.

Learn more: An in-depth guide on how payday loans work

Low-cost alternatives to payday loans

Payday loans are one of the most expensive ways to cover an emergency cost. If you can, consider one of these alternatives:

• Pay advance apps. Mobile apps that allow you to get a cash advance for a small fee or optional tip.
• Payday alternative loans (PAL). You’ll need to open an account, but you can borrow up to $1,000 from a federal credit union.
• Lending circles. You can take part in a rotating savings club to get a hand up and help someone else out when you’re able.

More short-term loan options

In addition to payday loans, many lenders offer installment loans. These allow you to borrow a larger amount — usually between $1,000 to $5,000 — for up to 18 months. But because you have more time to pay, there’s also more time for interest and fees to add up.

While title loans are less expensive than payday loans, they’re still a pricey option. And if you default, you could have your car repossessed.

You should also be careful when considering tribal loans. These aren’t regulated by state governments, which means you could pay extremely high fees when you borrow.

Finally, connection services allow you to browse multiple lenders. However, these aren’t regulated — and some may direct you to tribal lenders or other connection services.

Frequently asked questions

Answers to common questions about payday lending.

Can I get a payday loan instantly?
A lender may be able to fund your loan as soon as you’re approved if you visit a store.

You can compare lenders with physical locations to find one that may be able to fund your loan on the same day you apply.

Will borrowing a payday loan impact my credit?
Most payday lenders won’t send your information to the main credit reporting agencies: Equifax, Experian and TransUnion. However, they may send information on your loans and repayments to smaller credit reporting agencies, like Teletrack or LexisNexis.

The main danger to your credit score is payments. If you’re late on or miss repayments, your credit score could be negatively affected.

Your lender may also choose to take legal action to bring in unpaid loans or pass your loan on to a debt collection agency, which will affect your credit score.

What happens if I can’t repay my loan?
Like most things about payday loans, it ultimately depends on your state laws. If you default, your lender will likely turn your debt over to a collection agency.

Debt collectors sometimes take extreme measures to ensure you repay what you owe, some even going as far as — illegally — threatening you with jail time. But according to the Consumer Financial Protection Bureau (CFPB), you can’t be arrested for defaulting on a payday loan.

While you can’t face criminal charges for defaulting on a payday loan, your lender can sue to cover what you owe. A lender or debt collector can only garnish your wages if it has obtained a court judgment.

How do I know the lender I’m applying with is safe?
Check the lender’s state licenses, online reviews and contact information. If you can easily find out how to get in touch with a representative and find its license to operate in your state, then your lender will likely be legitimate.

However, it still pays to be careful. Some scams have been known to adopt the logo and website design of popular lenders.

Always confirm that the lender you choose is the real thing before submitting any personal information online or over the phone.

What is an ACH authorization?
An ACH authorization gives permission to withdraw money from your checking or savings account. Unless you can make payments by check, you will need to sign an ACH authorization.

Before you do, make sure you know how much will be debited and on what dates — and how to revoke the authorization.