A few common things you need to take out a payday loan include proof of income, valid ID, an active checking account, and to be at least 18 years old. But these requirements may vary depending on where you live and the laws in your area.
Payday loans are a common financial product that you’ve most likely heard of if you’ve ever needed quick cash and their market is expected to continue growing. According to Globe News Wire, the payday loans market was estimated to be worth roughly USD 33.5 Billion in 2021 and is expected to reach USD 42.6 Billion by 2028.¹
They’re considered “unsecured” loans because they don’t require any collateral to get one. These are meant for borrowers who have a difficult time making their money stretch to their next payday.
These loans are usually repaid within two weeks or on your next payday, hence the name. But because payday loans generally have high interest rates, they can be difficult to repay on time. And if you don’t repay on time, the lender may extend your loan and charge you additional fees or interest. This is called “rollover.”
Be careful when considering any short-term financial product like payday loans, title loans, or pawn shop loans. These loans may provide you with the cash you need at the moment, but they could carry unfavorable terms and conditions that could lead to more debt in the future. And if you don’t use a trustworthy and credible lender, you could end up in a cycle of debt.
Luckily, there are now several alternatives to payday loans and title loans. One is called a “personal installment loan.” These loans are usually repaid over a longer period of time than payday loans, sometimes up to a couple of years. They also allow borrowers to get more money (up to several thousand dollars in some cases).
At CreditNinja, we think the most important thing to remember, regardless of which loan you choose to take, is that making your payments on time and in full will keep you from ending up in a debt cycle.
Always be sure you’re capable of repaying the payday loan before signing for it. Do your homework, research the lender and the loan terms, and make a budget. And ask questions if there’s something you don’t understand. These tips can help you avoid predatory lenders, and find the right loan for your situation. For tips on finding the right loan and repayment, check out CreditNinja’s online resources.