12 million Americans will use a payday loan to cover an unexpected expense each year.
Though there’s a variety of reasons to get a loan, there’s no question this is a short-term answer for many. A cash-strapped situation can be hard enough. The worry of digging into savings can make it even worse.
If you’re wondering about payday loans but unsure how it works, read these 6 tips to secure what you need.
1. Know If a Payday Loan Is the Right Answer
Payday loans are an answer to small cash needs in an emergency. Or, catching up on regular expenses.
If you need a large sum for a major purchase or car repair, check other options. There are other loan types that allow paying larger sums over a longer period
2. Check Your Finances
Payday loans are available in amounts between $100 and $1,000. Before filling out the application, check your finances.
You’ll pay it back with your next paycheck, so be sure you’re not cutting yourself short. Though some lenders offer extensions, the best plan is to pay on time.
3. Proof of Income
Chances are that a lender will need pay stubs or letter of employment and bank statements.
You’ll need the most recent information. This is because the amount of your income allows lenders to determine loan amount.
4. Checking Account Information
You will need an active checking account for the loan to process, and you’ll have to write a check for the amount of the loan and fees.
The check will be dated for the day of payment, and the lender will process it on the future date.
Savings accounts or debit cards are not acceptable in most cases. But, borrowers have the option of paying off the loan before the due date by other means.
Every state has a borrower’s rule of at least 18 years old to apply for a payday loan.
Proof of age is necessary. Also, your ID must show the same information on pay stubs and checking account.
Any government issued ID is acceptable. Social security numbers are essential for some applications online.
6. Members of the Military
There are restrictions on payday loans for active duty military members. Because of the limits, most lenders do not offer payday loans for them.
But, there are many other options other than a payday loan for those who need funds right away.
It’s recommended to check your credit in before applying for loans or credit cards.
First, it’s useful information for you to have. And, it’s necessary for loans accessible to active duty personnel.
When It’s Time to Pay Off Payday Loans
Once you agree to the terms, it’s vital to be on time. But, life often happens much different than our best-laid plans.
If your due date approaches and the funds will not be there, you must contact the lender as soon as possible.
If you let them know before the due date, there are options for extending the loan term.
Need more help with payday loans? We’ve got it. Our Learning Center helps everyone learn more about personal finances and their many options.