The Informed Borrower

When applying for an online payday loan, there are some things every borrower needs to know. Every payday lender is different, but there is general information that will benefit all borrowers.

Before you start your application, be sure that you have considered and exhausted all other options (i.e. contacting creditors to get extensions, borrowed from friends/family etc.). Next, be sure you will be able to repay the borrowed amount PLUS fees and/or interest by the due date without having to turn right around and take out another payday loan.

Do not take a loan for more money than you can afford to pay back, regardless of the maximum amount offered to you. Only you can know your true debt to income ratio (DTI) – since there is no credit check, payday lenders do not base their approval on that information. It is a vicious cycle if one is not careful! Also, it is important that you not rely upon repeated payday loans – they are intended for short term emergency use only!

Be aware of payday lending legislation in your state! Some states impose strict laws, limiting the annual percentage rate (APR) that any lender, including payday lenders, can charge, some outlaw payday lending entirely and some have very few restrictions on payday lenders.

If you have thought things through as listed above, the next step is to gather the necessary information. Have your employer’s contact information readily available as payday lenders need to confirm that you are, in fact, working and bringing in a consistent income. Generally, they will require the company’s name, address and phone number. Some may also require faxed copies of your most recent paystubs as further verification of your income. Have your checkbook nearby, as you will need two sets of numbers encoded at the bottom of your check: the routing number and the account number. Some lenders may require a check number as well.

Research your prospective lenders thoroughly – some require documents to be faxed, including recent paystubs, checking account statements to confirm that your account is currently open as well as a signed promissory note.

Know your APR! Some lenders offer a flat fee, for example $15 for every $100 borrowed. You may think this is merely 15%, however this translates to approximately 391 % APR. Other lenders do not offer a flat fee, but rely on the APR alone, which will increase your fee along with the amount.

If you’ve gotten this far in your preparation, you are ready to begin the application process!

Once you have completed your application, the approval time will vary on which lender you have selected. Some deposit the funds directly into your account within an hour of you submission however, others may take anywhere from 24 hours to two weeks.