A payday loan is a short-term loan that’s due on your next paycheck. It typically requires that you write a postdated check for the balance plus fees or provide the lender with authorization to electronically withdraw funds from your bank account.

Payday lenders are often referred to as "loan sharks." But they do offer an easy way for people with poor credit to get cash quickly.

They’re fast

A payday loan is money a person borrows to cover expenses until their next paycheck. Typically, full payment is due within two weeks. Lenders usually ask borrowers to post-date a check for the loan amount plus fee or allow them to withdraw funds electronically from their bank account. If a borrower cannot repay the loan on time, they can return to the lender and request an extension, or rollover, which means they pay an additional fee for another two weeks.

Payday lenders operate out of storefronts and online. To apply, a consumer fills out a form with their identification and a recent pay stub. In many states, the loans are regulated by state laws that limit how much the lender can charge in interest and fees. In addition, a number of lenders are backed by credit brokers who gather information and sell it to multiple lenders. Credit brokers are required to register with the Financial Conduct Authority (FCA). You can check whether a credit broker is registered by checking the FCA’s website.

They’re easy

Unlike credit cards, payday loans don’t require extensive paperwork or an up-front payment. You can often walk into a payday loan store, sign a few papers and Payday Loans Lebanon leave with the money you need. Then you can pay back the loan with your next paycheck.

The easy application process and short-term nature of payday loans make them attractive to many borrowers. But they are not without their disadvantages. Typically, these loans come with high fees and triple-digit interest rates that can make them difficult to repay.

If you have trouble paying back your payday loan, consider alternative options. Some non-profit organizations offer credit counseling services at low or no cost. You can also contact your creditors to ask for a deferment or a payment plan. Alternatively, you can borrow the money to pay your payday loan from friends or family or take a cash advance on a credit card. Beware, however, of rolling over your loan—this can lead to a cycle of debt that you may find hard to break.

They’re affordable

If you need cash until your next payday, you can get a personal loan that is designed for people with bad credit or a poor financial history. These loans have lower interest rates, longer repayment periods and help build your credit. They can also be obtained from a bank or credit union that is insured by the Federal Deposit Insurance Corporation. Another option is to borrow from a peer-to-peer lending platform, which is similar to a payday loan but allows you to choose the amount you want to borrow.

Payday loans are often used to cover a crisis, such as an unexpected expense or a recurring monthly bill, but they can quickly become unmanageable. Many payday loan borrowers end up paying fees to roll over the debt into two more weeks, which creates an expensive cycle of borrowing.

If you are struggling to repay a payday loan, consider seeking credit counseling. Nonprofit agencies can provide free or low-cost advice on managing your money and eliminating debt.

They’re convenient

Payday loans can be a convenient way to get a small amount of money quickly. However, they are often not as cost-effective as other forms of credit. For example, credit cards offer more flexible terms and lower interest rates than payday loans Wilmington loans. Furthermore, if you belong to a federally insured credit union, they may offer payday alternatives (PALs) that are more cost-effective than payday loans.

While payday loans require minimal paperwork and can be obtained quickly, they come with sky-high interest rates—some as high as 391%. These high interest rates can cause borrowers to get caught in a debt cycle, with each new loan adding more and more fees. In addition, many payday lenders operate from storefronts in low-income communities and target people with limited access to other sources of credit. They prey on cash-strapped families, minorities, military personnel and others who cannot afford to wait for their next paycheck. They also do not report payments to the credit bureaus, which can hinder borrowers’ ability to build a strong credit history.