A payday loan is a short-term loan that can help you meet your immediate cash needs until you receive your next paycheck. These small, high-cost loans typically charge triple-digit annual percentage rates (APR), and payments are usually due within two weeks or close to your next payday. You can start by calling your creditors or the loan servicer to see if you can get an extension on your bills. Because of the high interest rate, many people end up owing more than they originally borrowed and don't pay the payday loan.
With a payday loan, if your check bounces or you can't pay the full balance on the required payday, you may have to transfer the loan to the next payday, accruing more fees in the process. The lower your credit score, the higher your interest rate and personal loan charges will be, or you may not be approved at all. In the long term, you can also work to fix the underlying financial issues that lead you to a payday loan counter. Bank's Simple Loan and Bank of America's Balance Sheet Assistant provide short-term funding for existing reputable customers.
While a payday loan may seem like a quick fix, there are other options that can help you stay out of a debt cycle. They may have poor credit or have no income, which may prevent them from obtaining a personal loan with better terms. Check NerdWallet's database of local alternatives to payday loans to see what's available in your state. If you don't have a plan to pay off your payday loan in full by the requested date, you'll need to refinance your loan, meaning you'll be responsible for the principal balance, additional charges, and accrued interest.
Before you apply for a payday loan, talk to banks and credit unions about your lending options and find the best available rate. Online lenders also serve borrowers with bad credit and can finance loans the next business day, but rates may be higher. Avant requires a minimum credit score of 580 FICO with an estimated APR ranging from 9.95 percent to 35.99 percent significantly lower than the estimated 400 percent you would face with a payday loan. The payday lender may report the default to the credit bureaus or sell the debt to a collection agency that does so, which will hurt your score.
Payday loans are short-term cash loans based on the borrower's personal check held for a future deposit or electronic access to the borrower's bank account. If you don't show up, the lender will write the check or make the withdrawal for the loan amount plus interest.