Payday Loan Literacy: Everything You Need to Know

With plenty of misconceptions surrounding this type of loan, we think it’s high time that we address payday loan literacy.

In this quick guide, we outline everything that you need to know about payday loans—keep on reading.

The Need for Payday Loan Literacy

In a nutshell, it is a short-term, unsecured loan that you typically pay back on your next payday. It’s quick, easy, and generally doesn’t require lengthy application forms to fill out.

If you’re strapped for cash and need to survive just until your next paycheck, the money that you get from a payday loan could help you get back on your feet.

This is why payday loan literacy is important. Yes, payday loans have a higher APR than a bank or credit card. And yes, it’s a quick and easy option. However, trustworthy lenders will tell you exactly what you are signing up for when you apply for one.

With that said, let’s talk about these loans and how you can keep them from leading to a cycle of debt.

Payday Loan Literacy 101

1. You will only need a few basic requirements

The allure of this type of loan is that it doesn’t include credit checks or ask you to fill out a lot of application forms. All you have to do is to meet the following requirements:

• You must be 18 years or older
• You should have an active checking account
• You have to give proof of income
• You must have valid IDs

Those are typically the requirements, although this may vary based on your lender’s discretion.

If you’re able to submit these, you can have your loan approved in as fast as 15 minutes.

2. They are also known as cash advance loans

Check advance loans, online payday loans, cash advance loans—these all refer to the same thing, and they all work the same way.

Your lender will give you cash and in return, you either write them a postdated check or give them authority to deduct the owed amount from your checking account.

3. It is a short-term loan

Payday loans are typically recommended for those who are temporarily strapped for cash. You might have your means of income, but something might have come up that has thrown your budget out of balance.

In this case, you can take out a loan – a short-term one – to cover the amount that you need until your next paycheck. This is how a payday loan works. You’ll typically need to pay back your loan after 2 to 4 weeks, depending on your agreement with your lender.

4. They do not affect your credit score

Taking out a payday loan does not require a credit check, nor does it affect your credit score after you have applied for one.

Lenders that offer them typically do not report your transactions to credit bureaus. However, if you fail to pay your payday loan, some lenders might forward your account to a collection agency. At this stage, this could have a negative impact on your credit.

Payday Loan Literacy with Lending Bear

If you need financial coverage until payday, your best course of action is to apply with a lender that you can trust. This is where Lending Bear comes in. We value payday loan literacy and will be happy to answer any questions that you may have about this type of loan—talk to us about it today.

Cash when you need it, fast and friendly.