Payday Loan Reviews FAQ
Frequently Asked Questions about Payday Loan Reviews
- What is a payday loan?
- What do I need to apply? How does a payday loan work?
- What if I don't have enough money in my checking account on payday?
- Can I take out loans from more than one lender?
- Are payday loan sites secure?
- Will a payday loan harm my credit?
- Why do payday loans get so much bad press?
- How did NextAdvisor review these payday loan lenders?
- Why can't I find information about payday loans in my state?
Search our site for more information about Payday Loan Reviews:
A payday loan is a short-term loan designed to give borrowers a small amount of cash to be paid back on the next pay day.
Customers fill out an online form complete with name, social security number, proof of employment, and checking account information. After submitting the form, an offer is made. When a customer accepts an offer, he/she will receive the amount electronically deposited, usually the next business day. On the customer's next payday, the principal plus the fee will be automatically deducted from the customer's checking account.
The lender is legally entitled to charge you an additional fee, no higher than $15.00 for a "bounced check." Your bank may also charge you fees for insufficient funds.
You can, but we don't recommend it. Payday loans should only be used occasionally, if at all. Getting caught in a cycle of multiple loan payoffs is expensive. For example, customers may be tempted to borrow $100 and think nothing of a $17.50 fee, and then decide to take out a loan from a different payday loan provider to pay back the initial loan. By this time they will have spent $35.00 to borrow $100 twice.
It depends on the site. We have confidence in our top-rated sites, but recommend that users avoid doing business with payday loan lenders who operate off-shore, as the one-star lenders we reviewed do. We also recommend that users opt-out of any offers to have their information shared with other lenders or advertisers.
An ordinary payday loan will not be reflected on your credit. Payday loan companies do not check your credit when you apply. Late or unfulfilled payments may have a negative impact, however.
Compared to other forms of debt, the APR is high. Also, many consumers take out multiple loans, meaning they start to accrue a large amount of fees. This is particularly true in states where refinancing is legal. However, since other forms of debt aren't available to everyone, occasional, responsible borrowing with a reputable company is ok. After all, the fees are typically less than bounced-check fees or late fees from credit card companies. It's important for customers to be realistic about their finances. If you're continuously taking out payday loans to cover bills, you should consider credit counseling.
We looked at each lender's website and looked for essential information such as availability of contact information, and we looked at how clearly the terms were spelled out and whether they were within the law as we understand it. We researched each lender's Better Business Bureau score to get an idea of their customer service practices. While we believe we've been thorough, we always recommend potential customers read all the fine print carefully before engaging with any financial service.
This is because payday lending is not legal in all states. 18 states and Washington D.C. prohibit extremely high cost payday lending. It is explicitly prohibited in New York, New Jersey, Georgia and Arkansas. It is defacto prohibited by several state small loan rate caps. These include Arizona, Connecticut, Marland, Massachusetts, North Carolina, Pennsylvania, Vermont, West Virginia and Washington D.C. Five states permit loans based on checks held for deposit but at a much lower rate than typical payday lending. These are Maine, Oregon and Ohio (which you will find information on in our reviews), as well as New Hampshire and Montana, which the payday loan services we review do not have licenses in.
Disclosure: NextAdvisor.com is a consumer information site that offers free, independent reviews and ratings of online services. We receive advertising revenue from most of the services we review. Our editors thoroughly research and whenever possible test each service we review and offer their honest opinions about each one. We are independently owned and operated and all opinions expressed on this site are our own.