Life doesn’t wait for payday. Whether it’s the final day for daycare registration, overdue rent, or a broken fridge, unexpected expenses can hit hard and fast. In fact, 59% of Americans don't have enough savings to cover a $1,000 emergency. And it can be tough to build savings when you’re already stretching every dollar to cover basic necessities.
Payday loans can seem like a lifesaver when you're desperate, but they can come with a high cost. If you're thinking about getting a payday loan, it's best to arm yourself with as much information as possible.
In this guide, we’ll walk you through the payday loan process — from how to get one, what’s required, and what happens afterward. We'll also look at the pitfalls and less risky alternatives that may work better for you in the long run.
What you need to qualify
Payday loans are known for being easy to access, and most lenders don’t check your credit score. Still, you'll need to meet some basic requirements, like:
- A government-issued photo ID
- Proof of steady income (like pay stubs, bank statements, or benefits letters)
- An active checking account or a suitable alternative, like a prepaid debit card that supports direct deposit and withdrawals
Most lenders also require you to be at least 18 years old, a U.S. citizen or permanent resident, and live in a state where payday loans are legal. Unlike bank loans, payday lenders don't ask about your total monthly expenses or ability to repay. However, lenders in states with stricter payday loan laws may check whether you have other active payday loans.
Where to get a payday loan
If you’re urgently looking for a payday loan, a quick online search will bring up dozens of options — but not all of them are safe or legitimate. Payday loans are offered in a few main ways:
- Storefront lenders. These are physical locations — often in shopping centers or near busy roads — where you can apply in person and walk out with cash the same day.
- Online payday lenders. These allow you to apply 24/7 from your phone or computer, with funds typically deposited into your account within a day.
- Loan apps. Some mobile apps offer payday-style loans, though terms and fees can vary widely.
Keep in mind: Payday lending is restricted or banned in some states. Check your local laws. If you want to know if a lender is licensed to operate in your area, the Consumer Financial Protection Bureau (CFPB) recommends checking with your state regulator or attorney general.
Step-by-step: How the process works
Here’s what the typical payday loan process looks like, from start to finish:
- Choose a provider. Start by deciding where to apply — a storefront, an online lender, or a loan app. Be sure to check reviews and confirm the lender is licensed in your state.
- Fill out the application. You’ll need to provide a government-issued ID, proof of income, your bank account details, and any other information that the lender requires.
- Get approved. Many lenders offer near-instant approval, while others may take up to 24 hours to review your application.
- Review and sign the agreement. Read the loan terms carefully — especially the APR, fees, and repayment date — before signing anything.
- Receive your funds. Money is typically sent via direct deposit. But some storefronts may offer cash.
- Repay on your next payday. Most loans are due in full within 14 to 30 days — mark your calendar so you’re ready to have it covered.
What to watch out for
Before taking out a payday loan, it’s important to fully understand what you’re agreeing to. Payday loans are often designed for speed, not clarity. When you’re under pressure, it’s tempting to rush through the small print, which means you might miss crucial details.
Here are some common pitfalls to watch for:
- Triple-digit APRs can turn a small loan into a major expense.
- Hidden fees, such as processing charges or late penalties, can add up quickly.
- Automatic renewals or “rollovers” may extend your debt and introduce new fees without reducing the original balance.
- Repayment terms can mean that the full loan is due in just one lump sum within a couple of weeks, usually on your next payday.
- Lack of flexibility means that if your financial situation changes, you’re stuck with the same rigid terms.
What happens if you can’t repay
Although the consequences of not repaying a payday loan can be extremely serious, it's important to know that if you're struggling, you may have options. Some states, including California, Florida, and Michigan, require lenders to offer an extended payment plan (EPP) to give you longer to pay. Many payday loans automatically roll over unpaid loans —extending your debt and adding new fees — which can lead to the debt snowballing.
The worst thing to do if you are unable to repay any loan is to ignore it. If the loan isn’t repaid, lenders may continue trying to withdraw money from your bank account, which could lead to overdraft fees. In time, the loan could be sent to a collection agency, and unpaid debt could affect your credit report or lead to legal action.
Safer alternatives to consider
There are alternatives to payday loans that cost less, give you more flexibility, and help you handle urgent expenses without making future payments harder to manage. These include:
- Credit union Payday Alternative Loans (PALs). These offer lower interest, longer repayment terms, and clear, regulated conditions.
- Employer hardship programs. Some workplaces offer short-term loans, payroll advances, or grants to employees facing unexpected expenses. Find out if your employer offers this benefit.
- Help from nonprofits. Charities, community organizations, and religious groups sometimes provide small grants or interest-free loans to help people who can't afford essentials.
- Borrowing from family. Although it can be hard to ask, you might find that your family members would be happy to help, especially if it means you can avoid expensive payday loans.
Rethinking payday loans: What to take away from this guide
There's a reason why payday loans are popular. They can offer fast cash with not a lot of effort. And when you don't have a good credit rating, you might feel like your options are limited. However, there's also a reason why these loans are banned in many states, including New York — because the interest charged is sky high.
Whether you opt to take out a payday loan is entirely your choice. But make sure you have all the facts beforehand. Consider whether the repayment terms are manageable with your current income; otherwise, you could find yourself stuck in a cycle of debt.
Earned Wage Access (EWA) is an alternative that offers access to money you’ve already earned, without high interest or mandatory fees. With EarnIn's Cash Out1, you can get part of your upcoming paycheck sooner — without falling into long-term debt cycles.
Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
This Blog was sponsored by EarnIn. While the author received compensation, the information shared is grounded in independent research and intended to provide helpful and accurate guidance to readers.
EarnIn is a financial technology company, not a bank. Banking services are provided by our bank partners on certain products other than Cash Out.
1
A pay period is the time between your paychecks, such as weekly, biweekly, or monthly. EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the Cash Out Maxes section of our Cash Out User Agreement. EarnIn reserves the right to adjust the Daily Max and Pay Period Max at its discretion. Your actual Daily Max will be displayed in your EarnIn account before each Cash Out.EarnIn does not charge interest on Cash Outs or mandatory fees for standard transfers, which usually take 1–2 business days. For faster transfers, you can choose the Lightning Speed option and pay a fee to receive funds within 30 minutes. Lightning Speed may not be available at all times and/or to all customers. Restrictions and terms apply; see the Lightning Speed Fee Table and Cash Out User Agreement for details and eligibility requirements. Tips are optional and do not affect the quality or availability of services.
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