A payday loan is a small, short-term loan that you can use for various needs. This loan type is designed to be repaid when you get your next paycheck and is a popular option for those who need money quickly or have fluctuating incomes.
Getting a payday loan is fairly simple, but keeping up with repayments is important to avoid falling further into debt. Below, we share some tips to help you stay out of debt, learn how to get a payday loan, and provide you with some payday loan alternatives if you decide to try another loan type.
How to Get a Payday Loan
Getting a payday loan is usually a straightforward and quick process. Many payday loans are available online and offer a near-instant loan.
How to get a payday loan? To get a payday loan, most lenders require that you:
- Are at least 18 years old
- Can show proof of income
- Have valid identification
- Have an active checking account
Each lender may have slightly different requirements, but these are the most important ones.
Most payday loan applications are simple and fast to complete, and you can often get the cash in your account in hours.
How to Pay Back Payday Loans?
Most payday loans must be paid off when you get your next paycheck. In this way, it acts like an advance on your paycheck.
Some payday lenders will just take payment from your bank when you receive your next paycheck. Others require a lump sum payment on the due date.
The most common way to repay a day loan is through bank transfer or post-dated checks. You must pay the full amount, with interest, by the agreed date. However, some lenders let you ask for an extension or the option to pay in installments if you think you might struggle to repay it on time.
According to CFPB research, one in five payday loan borrowers end up defaulting on their loans. The consequences for failing to repay on time could include late fees, a court summons, or losing assets like your car.
Tips to Repay a Payday Loan Without Falling Into Debt
Payday loans have a reputation for being difficult to pay off — as seen by the CFPB data. However, if you can keep your expenses low and repay the loan by your next payday, you shouldn’t have any issues. Here are some simple tips to repay a payday loan without getting into debt.
Cut Back on Expenses
The best way to use a payday loan is to pay it off in full by the agreed date. If money is tight right now, you may have to cut back on expenses to ensure you can fully repay. Missing repayments could impact your credit score if the lender calls in a third-party collection agency that reports the missing payments to credit bureaus. So think about any unnecessary expenses in your budget, for example, take-out, coffees, or online shopping purchases.
Avoid Taking on Another Payday Loan
Some people will try to play catch up with repayments by taking out a new loan to pay off an old one. However, this becomes a tough cycle to break. Being in so much debt consistently will reflect on your credit report.
Also, try to avoid taking one loan out after another, even if you have already paid off the last one, to avoid a debt cycle.
Contact Your Lender
As soon as you know you may struggle to repay your loan, for example, because you lost your job, contact your lender to discuss options. Most lenders will help you set up a payment plan, an extension or even a payment holiday to help you get through a tough time.
Payday Loan Alternatives
Like any loan type, payday loans have their pros and cons. They can be useful for fast access to cash and a short-term loan if money’s tight or you have an unanticipated expense. Just make sure to always try to repay the loan by the due date if possible.
However, an installment loan is a good payday loan alternative if you’re looking for a longer-term loan with monthly payments. It allows you to stretch your repayments out over a longer period, which is ideal if you want to take out a larger amount or simply keep your monthly payments low and manageable.
Jora offers flexible installment loans for bad credit, so you can get the finances you need even if your credit is in bad shape.
Learn more about Jora or apply today to start your application.