Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 30, 2021

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  • Payday loans provide up to $500 in cash without credit checks
  • Some payday loans have interest rates as high as 780%
  • Interest rates for military veterans are capped at 36%, even for payday loans

Some loan companies don’t require a credit check for a small loan. You can pick up a quick cash loan from a payday loan company by just providing your personal information.

But what are payday loans? Our guide explains everything you need to know about payday loans — how they work, where you can get them, and why you should avoid them.

Once you learn more about what payday loans are, enter your ZIP code in the free comparison tool to compare multiple lenders in your area.

What are payday loans and how much can I borrow?

Payday loans are quick cash loans that don’t require any credit checks. Borrowers can get up to $500 in cash. This amount varies for each state.

However, payday loans have incredibly high interest rates. Continue reading to learn how payday loans work.

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How do payday loans work?

To qualify for a payday loan, you’ll need a bank account and other personal information. There’s no credit check.

The cost of payday loans varies for each company. But, you can pay between $10 to $30 for every $100 you borrow.

What are payday loans used for?

If you need cash right away, you can get a payday loan. It’s commonly used for situations where a paycheck doesn’t come when you expect it. A payday loan can provide immediate assistance.

How to repay my payday loan?

As soon as you get your paycheck, pay the lender right away. If you borrowed close to $500, make smaller payments until the loan is paid off. Try to get the loan paid for before the two-week mark.

How do I get a payday loan?

Payday lenders are everywhere. You can get a payday loan online or from an office in your area.

According to the Consumer Financial Protection Bureau (CFPB), there were more payday loan companies in 36 states than McDonald’s restaurants in 2015.

Dangers of Payday Loans

Many politicians have described payday lenders as “debt traps.” Payday loan interest rates are much higher than other personal loan and credit card interest rates.

Some payday loan companies can charge up to 780% APR.

It’s an unfair interest rate, which begs the question of how these loans are legal. Most of these loans are small. Therefore, you won’t be paying them for an entire year.

Payday loans take advantage of borrowers’ desperation for fast money. So technically, you’re paying more than 100% back for using the payday lender’s money.

Watch Out for Rollover Loans

If you happen to get a payday loan, watch out for rollover loans. A rollover loan is a payday loan that gives you more money after you’ve paid off the payday loan.

Don’t get tempted. Get out of your payday loan as fast as you can. There are other options out there.

Other Loan Alternatives

Compare multiple lenders online. You can get a personal loan for emergencies at a much lower interest rate if you shop around. Our free comparison tools throughout this webpage can help you find a few loan companies near you.

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Enter your ZIP code below to view lenders with cheap loan rates.

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States That Prohibit Payday Loans

Thirty-seven states regulate payday loans. However, 13 states have prohibited payday lenders altogether. Here’s a list of those states.

  • Arizona
  • Arkansas
  • Connecticut
  • Georgia
  • Maryland
  • Massachusetts
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Pennsylvania
  • Vermont
  • West Virginia

Washington D.C. has also outlawed payday loans. Because of the massive interest rates on payday loans, legislators are not fond of them.

Is the United States military protected from payday loans?

Military veterans are protected from payday loans with high interest rates. According to the CFPB, the Military Lending Act prevents any lender from increasing interest rates beyond 36% when lending to veterans.

Do payday loans affect my credit score?

Since payday loans don’t check your credit, they can’t affect your credit. There’s no significant or long-term benefit from getting a payday loan. You’re better off getting a credit card.

Payday Loans: What’s the bottom line?

Payday loans aren’t good options for personal loans. A loan that’s described as a “debt trap” isn’t helpful to your overall finances. Payday lenders often take advantage of people who need money fast.

Although military service members are protected from the ridiculously high interest rates, veterans should still avoid payday loans.

Now that you know more about what payday loans are, use our free online quote tool to compare multiple lenders near you and secure a loan with a low interest rate.