When you need to borrow money, you do have a few options available.
Like a lot of Americans, it doesn’t take much to be in a financial lurch. The median savings account balance is only $4,830. All it takes is one emergency and you need cash.
Payday loans can be used as a way to close the cash gap in the short term. Keep reading to find out more about payday loans and how much you can borrow.
What is a Payday Loan?
A payday loan is a short-term loan that can be used for financial emergencies that happen in between paychecks.
You might get paid the first and third Fridays of every month and your budget is pretty tight as it is. Your kid could fall from their bike resulting in an unexpected medical expense.
Rather than choosing what bills to pay and not pay, a payday loan will give you cash to cover your medical expenses and bills. You have to pay back the loan in full along with added fees when your next paycheck arrives.
If you don’t pay the loan back in full, you could be caught in a vicious cycle of debt.
How Much Can I Borrow with a Payday Loan?
If you need to borrow money and think that a payday loan is right for your situation, how much can you borrow? There are a few variables as to the amount you can borrow, provided that you meet the requirements of the loan.
Where You Reside: Payday loans are heavily regulated. Some states have a maximum amount you can borrow. In Nevada and New Mexico, you can only take out 25% of your monthly income. In Delaware, you can take out as much as $1000.
Some lenders will get around these restrictions by having their main operations in a state that doesn’t have strict requirements. You’ll see this with online lenders.
Your Income: Since payday loans are based on being paid back on payday, your income is going to be a primary factor in the amount you can borrow.
Payday loans are easy to get, but they’re not automatically approved. You can get a payday loan with bad credit or good credit.
You do need to prove your income by showing pay stubs or a W-2. Lenders will want to see that you have a steady job and are able to pay the loan back on time. If you’re paid in cash or self-employed, you’ll have a hard time getting approved for a payday loan.
When You Need to Borrow Money
What are your options when you need to borrow money? You can take out a payday loan or ask for cash from family and friends.
When you take out a payday loan, the amount you can borrow depends on your location, your income, and when you expect to pay back the loan.
Would like to learn more about payday loans? Read this article to find out how to get a payday loan without paying too much.