When you need money quickly, a payday loan may seem like a good idea. After all, they're easy to get, quick, and usually don't require a credit check. But payday loans can be very expensive, often with triple-digit annual percentage rates (APRs). Because they can be difficult to pay off in full by the due date, they're notorious for trapping borrowers in a costly cycle of debt.
It’s best to compare alternatives, such as a personal loan, to see if you're eligible. Average personal loan rates for poor credit were 30.25% in November 2023, according to Credible data.
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Common payday loan requirements
Lenders may have different requirements to qualify for their specific loans, but you should generally meet the following:
- Be 18 or older: Payday lenders will not lend to someone younger than 18 years old.
- Have a valid ID: You’ll need an up-to-date government ID, such as a driver’s license or passport.
- Have proof of income: A pay stub or other method of verification of income from a job or another source, such as a Social Security payment, is generally necessary.
- Have an active account with a bank, credit union, or a prepaid card: Payday lenders can withdraw the full amount due from your bank, prepaid card, or credit union account (with your authorization) on your next payday. Alternatively, you can write a post-dated check with fees included.
State regulations affecting payday loans
Because of the payday loan industry’s (well-deserved) reputation for predatory lending practices, 26 states have regulated them in various ways, commonly focusing on loan terms, maximum loan amounts, and the amount companies can charge in fees or interest. Sixteen of the 26 states require payday lenders to offer borrowers no-cost extended payment plans, and some states have prohibited payday loans altogether.
The details can vary dramatically. For example, Idaho’s $1,000 maximum loan limit is more than three times the limit in California, while some states — like Washington — tie the maximum loan amount to the borrower’s income.
Here’s a look at how three states regulate the payday lending industry:
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| | | | A fee for a deferred deposit transaction shall not exceed 15% of the face amount of the check | |
| | | | Finance charges are limited between 10% to 15% of the principal, depending on the amount | |
Data via the National Conference of State Legislatures and Pew Charitable Trusts.
What to consider before applying for a payday loan
Before you take out a payday loan, it’s wise to think through the implications. Here are some of the major factors to consider:
- The total cost of borrowing: Payday loans are one of the most expensive ways to borrow money. A typical payday loan with a term of two weeks and a fee structure of $15 per $100 borrowed adds up to an APR of nearly 400%. Compared to other borrowing options, such as credit cards, this is extremely high. Credit cards, which typically have high APRs already, generally range up to 30% APR.
- Your repayment schedule: Payday loans must be repaid in full from your next paycheck, and that extremely short repayment term can be challenging. Let’s say you take out a $500 payday loan with the terms listed above — on your next payday, you can expect to have $575 pulled out of your bank account. If money has been tight, you may be forced to roll over the loan, which can lead to further fees.
- The cost of rolling over your loan: Many states are required to offer no-cost extended repayment plans for payday loans, but the Consumer Financial Protection Bureau found that borrowers continue to pay expensive rollover fees, regardless, which keep them in a cycle of costly debt. On an average $300 payday loan, you could pay $45 every two weeks to roll over the loan until you could pay off the balance. If you kept doing this for four months, you’d pay $360 in fees without paying back any of the original $300 you owe.
Check Out: Best Emergency Loans for Poor Credit
Personal loans vs. payday loans
Personal loans are another option when you have surprise expenses, and they offer lower borrowing costs on average than payday loans, as well as longer repayment terms. While payday loans may top out at $500, depending on your state, and must be paid back within two to four weeks, personal loans offer a range of loan amounts, from $600 to over $50,000, and repayment terms generally extend from one to seven years.
Learn More: Are Payday Loans Safe?
Tip
Longer terms make repayment more doable, as you will make multiple smaller payments over time, compared to one large payment with possible rollovers.
For example: Let’s compare a small personal loan to a payday loan. First of all, the cost of borrowing is very different. The average interest rate on a payday loan — if paid back on time — is 391%, according to the Federal Reserve Bank of St. Louis. In contrast, the average interest rate on a 24-month personal loan from a bank is 12.49%, according to Fed data.
If you borrowed $500 from a payday lender with a 15% finance charge and a term of two weeks, you’d owe $575 on your next payday. That fits pretty closely to the average rate of 391%.
But don’t forget if you can’t make that payment on time, you may be offered a rollover, which could add $75 to what you owe every two weeks. That’s roughly $150 a month to continually re-borrow the same $500 as long as you can’t repay the loan in full.
On the other hand, let’s say you take out a $600 personal loan at a 30% APR (because, let's also say, you have poor credit). This loan has a 12-month repayment period. Your payment is only $58 per month and the loan would be paid off in one year.
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Overview
PenFed is a credit union that offers personal loans to applicants with good credit. Though you'll need to become a member to receive a loan, membership is open to everyone. PenFed shines with no origination fees, small available loan amounts, and low interest rates. If you don't have a FICO score above 700, you may not qualify on your own, but can apply with a cosigner with good credit — which is not something most lenders offer.
PenFed doesn't have a minimum income amount, and offers live chat and an entirely online loan application process.
Fees
Unsuccessful payment fee, late fee
Time to get funds
Typically 1 to 2 business days after verification
Loan uses
Debt consolidation, home improvement, credit card refinancing
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Repayment terms
1 to 5 years (2 to 5 years through Credible)
Overview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 700). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Overview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
Overview
BHG Money stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Payday loan alternatives
There are other ways to get money when you need it. Here are some of the most common:
- Personal loans: As discussed above, personal loans can offer a flexible and less expensive option for borrowers. Some lenders offer same-day funding, making them almost as speedy as payday lenders.
- Credit cards: Credit cards, on average, carry higher interest rates than personal loans, but are still less expensive than payday loans and offer more flexible repayment terms.
- Home equity: If you have equity in your home, a home equity loan or a home equity line of credit may be a good option. But remember, these loans are secured by your home, meaning you could lose it if you default.
- Payday alternative loans: Some federal credit unions offer payday alternative loans (PALs) that are designed for bad-credit borrowers, but cap APRs at 28%. Depending on the type of PAL, they can offer repayment terms up to one year and loan amounts up to $2,000.
Related:
Payday loan FAQ
Can I get a payday loan with bad credit?
Yes, you can get a payday loan with bad credit, because many payday lenders do not take your credit score into account when considering your application. Since your repayment is intended to be pulled directly from your bank account on your next payday, these lenders do not weigh your credit score as heavily as traditional lenders.
How quickly can I receive funds for a payday loan?
Many payday lenders will get you your money quite quickly, ranging from immediately for an in-person application to one business day for an online application.
What happens if I fail to repay a payday loan?
If you can’t repay your payday loan in full on your due date, you can ask your lender about an extended repayment plan. These plans may come with a fee. Some lenders may require you to renew or roll over your loan, which often comes with much higher fees and does not help you progress on repaying your principal.
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Meet the expert:
Hilary Collins
Hilary Collins is a finance writer and editor. She loves taking topics that could be dry and complicated and turning them into engaging stories with actionable takeaways.
