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Where Should I Get Payday Loans Online?

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By Tracy Sherwood-Knepple

Written by

Tracy Sherwood-Knepple

Writer

Tracy Sherwood-Knepple is a writer for Credible.

Edited by Ashley Harrison

Written by

Ashley Harrison

Writer

Ashley Harrison has over six years of experience as an authority on personal finance. Her work has been featured by USA TODAY Blueprint, Forbes Advisor, Fox Business, and Yahoo Money.

Updated June 14, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

For many consumers, payday loans have long served as a stopgap measure for taking care of emergency expenses.

Today, there are many options for obtaining payday loans online, providing what is essentially a cash advance on your paycheck before the next payday.

Some precautions about payday loans apply regardless whether you are walking into a lender's office, or applying online.

Interest rates on payday loans tend be be higher than other types of loans. It's important to note that not all online payday lenders will disclose the interest rate prior to completion of an application.

Within your loan application, there are also terms specific to that lender. These can include clauses against lawsuits, mandatory arbitration clauses and even restrictions on filing for bankruptcy while the loan is being repaid.

A consumer must also keep the bank account from the original loan application open until the loan has been repaid. You may also find a clause that allows for wage assignments, even though this is not legal in all states.

There are other potential costs involved with these loans. For one, if the funds required to pay the loan back are not available in your account on the next payday, you'll be hit with overdraft fees not only from the bank, but also from the lender.

Additionally, there is the added security risk of providing your banking and identity information to an online lender.

The Consumer Federation of America (CFA) cautions against these types of loans. Instead, the CFA encourages shopping for other options, such as small personal loans.

Simply put, payday loans are expensive due to high finance costs, which make it very difficult to repay them in a timely fashion. For online payday loans, there are also additional risks that should make a consumer cautious before signing on the dotted line.

Online payday lenders typically require that consumers provide proof of income. They may also require the borrower to provide their Social Security number and bank account information.

Approvals are usually completed within roughly 24 hours and funds are typically deposited directly into your bank account within a predefined period. When the lender is approving a potential borrower, they typically give more weight to income than credit score.

By providing the required information, the consumer agrees to have the loan funds deposited directly into their account. On the next payday, the lender will withdraw the borrowed amount.

However, many lenders just withdraw the finance charge, and automatically renew the loan. These loan renewals do not reduce the principal. Depending on the lender, the loan principal will not be reduced until after several renewals. As a result, the cost of repaying the loan goes beyond the finance charge.

Online payday lenders typically have an upper limit on the size of loan they'll fund -- $1,000, for example. There may also be an age limit -- some lenders may require that you be 21 or older, others don't. You should expect to provide proof of income, a state-issued ID and any additional requests unique to the lender.

Tracy Sherwood-Knepple is a business and finance writer. She holds a degree in mass communications from Indiana University.

Meet the expert:
Tracy Sherwood-Knepple

Tracy Sherwood-Knepple is a writer for Credible.