Payday Loans - How It Works?

payday loans work

You can see a basic payday loan application scheme - what steps are usually involved in the process as it is with the majority of lenders around the country. There can be some variations with regards to a state and a lender.

Application

When you apply online, through a build-in application you send your request to a payday lender. The application is very simple and takes little time to be filled in. As soon as a lender gets your application with all the required details, you get contacted by a representative or get an e-mail with further instructions.

Approval

Approval takes very little time. A person is generally notified within an hour and given all the further details. One of the reasons for the approval to be so fast is that payday lenders do not perform any credit checks. Your credit score does not make any difference and does not influence on the approval in any way. People with bad credit are approved as fast as the ones whose score is perfect.

Funded

The money is transferred directly to a person's bank account within 24 hours after the application is approved.

Repayment

The repayment process is also very simple. As long as money is funded to a person's bank account, when the time comes, the total loan sum with the interest added, is automatically withdrawn from the account by a lender. This is done on the day of the repayment, which is generally the next payday of a borrower. Some lenders allow roll-overs in case a person is unable to repay in time. However, this option is not available in every state and presupposes additional finance charges.

Basic payday loan requirements:
  • US citizenship;
  • proof of identity;
  • legal age (over 18 years old);
  • proof of physical address (phone or utility bill);
  • proof of employment;
  • proof of income that is no lower than $1000 per month;
  • a valid checking account in a bank.
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