How To Get a Payday Loan: Quick Step-by-Step Guide

To get a payday loan, you can typically apply either online or in-branch. Payday lenders usually don’t require credit checks, but you’ll have to provide an ID and proof of income. If you’re approved, you can usually receive the funds the same day.

While payday loans are a quick and accessible option if you need a short-term loan, the cost is steep. Fees typically translate to an annual percentage rate (APR) of 300% to 500% or more, and missing your repayment date can set off a cycle of rollovers that compounds fast.

MoneyLion

What’s a simple way to avoid interest on purchases?

Pay minimum onlySkip due datesUse multiple cardsPay balance in full

54

This guide explains how to get a payday loan, what lenders look for and which alternatives may offer safer borrowing options.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Key Takeaways

• Getting a payday loan is straightforward, but the cost is steep. Most lenders only require an ID, proof of income and an active bank account, but fees typically translate to an APR of 300% to 500% or more.

• Payday loans must be repaid in one lump sum by your next payday. If you can't cover the full amount, rolling over the loan triggers additional fees that can quickly spiral into a cycle of debt.

• Payday lending laws vary by state, so availability and cost depend on where you live. Some states ban payday loans entirely, while others cap loan amounts, APRs or rollover terms.

• Several alternatives are worth considering before turning to a payday loan. Earned wage access (EWA) products, credit union payday alternative loans (PALs) and payment extensions from creditors can all provide short-term relief at a lower cost.

Summary generated by AI, verified by MoneyLion editors

How To Get a Payday Loan in 6 Simple Steps

Here's how to get a payday loan, broken down step by step.

1. Check state availability and lender licensing: Payday loans aren’t legal in all 50 states, so depending on where you live, they may not even be an option. If they are legal in your state, you should make sure the lender you work with is licensed in that state.

2. Compare offers and fees: Begin your online search by looking at various payday lenders. Pay close attention to the fees and APR they charge so you can compare how much you’d pay in total to borrow money.

3. Gather the required documents: Payday lenders typically require an ID and proof of income or employment. You also need a bank account in good standing where you receive a paycheck. If your account is inactive or has a negative balance, the payday lender may not approve your application.

4. Complete the loan application: Depending on the lender you work with, you can either do this online or in-store.

5. Review your loan agreement carefully: Before signing any documents, read the fine print so you know exactly how much you’ll be paying to borrow money, along with all extra fees. Also, make sure you know exactly when repayment is due and how the lender will collect it.

6. Receive funds and prepare for repayment: Once you sign the payday loan agreement, you’ll receive your funds, often as soon as the same day. From there, make sure you’ll be able to repay the loan by the time it’s due.

Payday Loan Requirements: What Do You Need To Qualify?

Before applying for a payday loan, make sure you meet all the requirements and have all the required documents. This will speed up your application process and maximize your chances of getting approved.

Basic Eligibility Requirements

The basic eligibility requirements for a payday loan are usually limited to the following:

• You must be at least 18 years of age

• Government-issued ID

• Proof of income

• Active checking account

• Valid phone/email

What Lenders Actually Look At

Meeting the basic payday loan eligibility requirements doesn't guarantee that you'll be approved. While payday loans have a reputation for being easy to get, lenders often evaluate factors you may not expect.

• Income stability matters more than how much you make. Payday lenders want to see evidence that you receive a consistent paycheck, which can indicate that there's less of a risk you won't repay the loan. If you have irregular deposits or gaps in income, that can give lenders pause.

• Bank account health matters. Beyond looking for regular paychecks, lenders want to see that your bank account is in good standing. If you have a negative balance or any recent overdrafts, a lender may not feel comfortable approving your application.

• Lenders may look at your repeat borrowing history. Some states have payday loan databases that track borrower eligibility and history. If you've repeatedly used payday loans and have a pattern of rolling over the repayment date, your approval chances may be limited.

• No credit check doesn't mean no verification. Instead of a traditional hard credit check, lenders may use databases like Clarity Services and Teletrack to check your profile. This usually involves a soft credit inquiry, but you can check with the lender to confirm before you apply.

How Much Can You Borrow and What Will It Cost?

Typical Loan Amounts

Payday loans are for smaller amounts than standard personal loans. The exact borrowing limits vary by state, but in general, loans range from $100 to $1,000.

Cost Breakdown

The fee structure for payday loans is simple but expensive. Most lenders charge a flat fee for every $100 you borrow. Here’s what that can look like with various payday loan amounts.

Repayment Structure

Unlike traditional personal loans, which you repay in equal monthly installments, payday loans require repayment as one lump sum that’s due when your next paycheck clears.

• Lenders usually accept postdated checks, or you can set up ACH authorization so the lender can automatically debit the sum from your linked bank account.

• If you can’t repay your payday loan in full by your next paycheck, you’ll have to roll over the payment date.

• You'll usually be charged additional fees for rolling over the loan, which can quickly compound your debt.

This is the less-discussed reason that payday loan borrowers can get stuck: When your entire paycheck goes toward repayment, you might need another loan the following week. It can become a vicious cycle of debt that's increasingly difficult to end.

State Laws and Payday Loan Restrictions

Payday loan laws vary widely by state. Some states ban payday lending entirely, while others limit loan amounts, APRs or repayment terms.

Before applying, make sure the lender is licensed in your state and review local laws that may affect borrowing costs and rollover rules.

Payday Loan Risks: What To Know Before You Apply

Keep these risks in mind if you're thinking about taking out a payday loan.

Common Payday Loan Risks

• Debt cycle: The lump-sum repayment structure of payday loans can be unmanageable if you have a tight budget and rely on repeat payday loans to cover repayment. Because of this, you could pay far more in fees than the original loan amount.

• Bank overdraft: If you don't have enough funds in your bank account for the lender to collect repayment, you could be charged overdraft fees by your bank. This further compounds the cost of borrowing money.

• Collection activity: Payday lenders can send your payday loans to collections, which will damage your credit. You'll also be contacted repeatedly by the third-party collections agency looking for payment.

• Legal consequences: Lenders can't have you arrested for not paying back a payday loan, but depending on your state, they could pursue civil judgments that can lead to wage garnishment.

Payday Loan Red Flags To Watch For

Not all payday lenders are reputable. Avoid any lender that:

• Doesn’t have a state license or any licensing information listed 

• Requires an upfront fee before releasing the loan funds

• Promises guaranteed approval without any verification

• Uses high-pressure tactics or creates artificial urgency

👉 Find out more of the pros and cons of payday loans.

Alternatives to a Payday Loan

A payday loan usually isn't your only option for borrowing money or getting access to the funds you need. The following payday loan alternatives could be safer and cheaper, depending on your situation:

• Installment loans: Unlike payday loans, installment loans let you make repayments in equal monthly chunks. If you need longer than one paycheck to repay the money you borrow this is a better option. 

• EWA: Some employers offer early access to your earned wages, and this option avoids interest charges. You can also explore EWA products like MoneyLion Instacash^®.

• Payment extensions from creditors: If you’re considering a payday loan because you owe money, consider going directly to them to negotiate. You could work out a repayment plan with your utility company or landlord and this could end up being cheaper than a payday loan.

• Credit union small-dollar loans: Many credit unions offer PALs, which are similar to payday loans but have interest rates capped much lower, at 28% APR.

• Borrowing from friends or family: You could also turn to your network of loved ones to see if anyone is able to lend you money. Just be clear on their terms, including when they expect repayment and whether they want interest on the money borrowed.

Should You Get a Payday Loan?

• Payday loans offer quick access to cash for those experiencing a cash flow gap.

• Their convenience and accessibility make them popular options for emergency loans, but they’re far from the cheapest way to borrow money.

• A payday loan could be the right move for you, but only if you’re sure you’ll be able to repay the amount in full by your next paycheck so you avoid racking up fees. 

• Before you sign a payday loan agreement, read the terms carefully so you know exactly what you’ll be paying.

• If you do take out a payday loan, commit to using it as a short-term emergency tool rather than a long-term solution you repeatedly rely on to make ends meet.

Payday Loan FAQs

Can you get a payday loan with bad credit?

Yes, you can usually get a payday loan with bad credit, so long as you have a steady paycheck and a bank account in good standing.

How fast can you get a payday loan?

You can often get a payday loan as quickly as the same day, though the exact timeframe depends on the lender.

What happens if you can't repay on time?

If you can't repay your payday loan on time, contact your lender before the due date. They may be willing to work with you on a payment plan. If not, they might attempt multiple ACH withdrawals from your account, which can trigger bank overdraft fees on top of extra loan fees. Unpaid payday loans can also be sent to collections, which will damage your credit.

Are online payday loans safe?

Only lenders with appropriate licensing for your state are safe. Beyond that, payday loans can be risky if you aren't able to repay the full amount by your next paycheck, since you'll quickly incur extra fees that can push you toward a cycle of relying on new loans to repay existing debt.

Key Terms

• APR: The yearly cost of borrowing expressed as a percentage, including fees. Payday loan APRs typically range from 300% to 500%, making them among the most expensive borrowing options available.

• ACH authorization: Permission granted to a lender to electronically debit repayment directly from your bank account. Missing a repayment can trigger overdraft fees if your account balance is insufficient.

• Rollover: A payday loan feature that extends the repayment date in exchange for an additional fee. Repeated rollovers cause debt to compound quickly and are a leading driver of the payday loan debt cycle.

• PAL: A small-dollar loan offered by credit unions with APRs capped at 28%. PALs provide a lower-cost substitute for traditional payday loans with more manageable repayment terms.

• Teletrack: A consumer reporting database some payday lenders use to review a borrower's short-term lending history. It operates separately from traditional credit bureaus and may be checked even when no hard credit inquiry is performed.

Summary generated by AI, verified by MoneyLion editors

Sources

• Consumer Financial Protection Bureau. 2024. "What is a payday loan?"

• Consumer Financial Protection Bureau. 2024. "What are the costs and fees for a payday loan?"

Photo credit: lechatnoir/Getty Images