What Are Payday Loans + 11 Most Popular Payday Lenders in 2023

About 12 million Americans take out at least one payday loan yearly to help cover their bills between paychecks.

On the surface, they seem like a great way of getting through a crisis. But they quickly leave borrowers trapped in a cycle of debt, making them wish they’d never taken out the loan in the first place.

Here’s what you need to know about payday loans and which payday lenders to avoid.

How Do Payday Loans Work?

Payday loans exist under many names, including:

Cash advance
Short-term loan
Bad-credit loan
Fast-cash loan
Paycheck advance

Whatever the name, these short-term loans range from $100 to $1,000 and must be repaid in a lump sum that includes the principal balance plus interest and any lending fees.

Pro tip: Payday loans technically don’t have interest rates. Because of the short-term, they’re disguised as fees. Charging a $15 fee for a $100 loan seems more reasonable than telling a borrower that they’re paying an annual percentage rate of 391%.

Borrowers are usually given two weeks, or until their next paycheck, to repay the small loan in full. However, some lenders will allow borrowers to repay the loan in installments over a few months.

Payday lenders require borrowers to grant them access to their bank or credit union account. This is so the lender can transfer the funds into the account and, when the time comes, withdraw the amount they’re owed.

If the borrower doesn’t have a checking account, the lender may instead accept a postdated check or prepaid card account.

READ MORE: How payday loans work

Pro tip: This also means that you’ll pay multiple overdraft charges if the money to repay the loan isn’t in your account on your next payday.

And because of the high fees, more than 80% of payday loan borrowers cannot repay the loan on the due date. This leads to loan rollovers and leaves borrowers struggling in what’s known as the payday loan trap.

For more information on how payday loans work and their potential dangers, check out this CFPB video.

Most Popular Storefront Payday Lenders (by search volume)

Storefront payday lenders typically operate out of small stores and offer on-site applications and approval. Many of these lenders also use an online application.

Advance America

Headquartered in Spartanburg, S.C., Advance America is a highly popular storefront lender that specializes in payday loans, title loans, and installment loans. It has 219,000 searches per month.

Pros:

Operates in over 25 states with 2,000+ storefront locations across the U.S.
Legitimate company established in 1977.
Superior customer service with quick response times.
Easy online and in-person application.
Many consumers receive funds the same day.
Provides useful resources online, including a repayment estimator which allows the borrower to calculate the interest on the life of their loan and make a payment plan before they borrow.

Cons:

Automatic withdrawal from the borrower’s checking account when the loan is due.
Borrower must be a resident of the state they’re requesting funds in.
Interest rates are high and vary by state (in Alabama, for example, the APR is 456.25%).
Some reviews mention the company is a scam, but these are from competitors and inaccurate.

Speedy Cash

Founded in 1997, Speedy Cash is a privately held lender offering short-term payday and installment loans. The company has 98,000 searches per month.

Pros:

Multiple ways to apply, including in-person and on-site.
May obtain funds on the same business day.
No penalty for early payment.
Borrowers can receive funds via direct deposit, prepaid debit card, or in person.
Straightforward application.
Lender offers payday loans up to $500, depending on the state, as well as larger installment loans.

Cons:

Certain states charge an origination fee, which is an upfront charge for processing a loan.
Not available in all states.
Sky-high interest rates.
Loan terms vary by state.
Not BBB-Accredited, though it has an A+ rating by customers on BBB.org.
Over 300 customer complaints in the past three years, mostly related to billing, loan collection, and predatory lending practices.
Was part of a class-action lawsuit in California for allegedly withdrawing hundreds of thousands of dollars from 1,000+ borrowers.

Check Into Cash Inc.

Based in Tennessee, Check Into Cash was founded in the year 1993. It has 57,000 searches per month.

Pros:

BBB Accredited since 2000 with an overall positive customer review score.
Available in 20+ states.
Offers short-term online and in-store loans, specifically payday and title loans.
Loans vary from $50 to $1,000, depending on the state. First-time borrowers can borrow a maximum of $750 or their state’s upper limit.
Loan activity, including repayment and missed payments, is reported to a credit bureau.
Online educational resources for consumers.
Fast online and in-person approval.

Cons:

Application requires a hard inquiry, which may impact the borrower’s credit score.
High payday loan fees (APR ranges from 153% to 1,042%, depending on the loan amount and state).
Short-term payment options only.
Frequent miscommunications and loss of receipts.
May have additional fees for lay payment or insufficient funds.
Inability to pay may result in the account going to collections.

Ace Cash Express

With 43,000 searches a month, Ace Cash Express is the fourth most popular storefront lender on this list. The lender offers short-term payday loans to help underbanked consumers with small financial emergencies.

Pros:

Option to apply online or in person.
Lender offers short-term loans.
Borrower can decide to return the loan within 72 hours without penalty.

Cons:

Website isn’t user-friendly.
Available in just 13 states.
Interest rates vary, but consumers with poor credit can expect to pay more especially for installment loans.
Lender doesn’t attempt to educate the consumer to help them with financial pitfalls or understand the risks of short-term loans.
In 2014, the Consumer Financial Protection Bureau took action against Ace Cash Express for using illegal debt collection methods, luring borrowers into payday debt traps, and encouraging employees to carry out these practices.

Check ’n Go

Operating under CNG Financial Corporation, Check ‘n Go is a non-BBB-accredited lender with 42,000 nationwide searches a month.

Pros:

Easy online or in-person application.
A bank account is not required if using a prepaid debit card.
Multiple short-term loans are available, including payday loans, installment loans, and cash advances.
Installment loans have a longer payoff term than payday loans.
Good credit isn’t necessary.
May receive funds within one or two business days.

Cons:

Loan terms and tactics may be deceptive and lead to an ongoing debt trap.
Like other short-term lenders, Check ‘n Go is targeted at low-income, high-risk borrowers.
Extremely high interest rates.

Payday Loan Qualifications

Getting a payday loan is easy because there are only a few requirements. It’s possible to get a payday loan online or at a storefront location. To qualify, you’ll need:

A steady source of income
Valid identification (driver’s license, birth certificate, social security card, passport, etc.)
An active bank or credit union account (or a prepaid card account)
To be 18 or 21 years old, depending on the state

READ MORE: Payday loan requirements

Pro tip: Payday loans are unsecured loans, so they don’t require any collateral. This is the key difference between a payday loan and a title loan, where the loan must be secured with your car title.

The application is usually fast and easy. To apply, the borrower usually only needs to fill out their basic contact information, provide their income and banking information, and sign the form. They may also need to provide supporting documents like their ID or recent pay stubs.

Payday laws are illegal in several states, but that doesn’t seem to be much of a deterrent for payday lenders. They’re still available virtually everywhere.

Should You Get a Payday Loan?

A payday loan may be easy to get, but it’s a high-cost loan and you need to have a solid repayment plan.

For the most part, you should only get a payday loan as a last resort. Even then, it’s important to make a solid plan to pay it back on time. Otherwise, consider other options instead.

Payday Loans and your Credit Score

Payday loans aren’t usually reported to the three credit bureaus, so it’s unlikely that repaying one on time will appear on your credit report. However, if you default on your payday loan, the loan will be handed over to a collection agency, and collection agencies will report it to the credit bureaus.

This means that its far more likely to hurt your credit score than help it.

What are Your Payday Loan Alternatives?

If you’re looking for an alternative to a cash advance or payday loan, check out these options.

Bad credit loan
Personal loan
Credit card cash advance
Debt consolidation loan
Payday Alternative Loan
Peer-to-peer loan
Ask friends and family for help
Use a paycheck advance app
Form a lending circle
Sell items you aren’t using

READ MORE: Payday loans vs. installment loans

Military Service Members Have Special Protections

The Military Lending Act (MLA) was enacted in 2006 to protect active military members and their families from predatory lending practices. To qualify, you or your spouse must be an active-duty member with at least 30 days of service at one of the five military branches: Coast Guard, Marine Corps, Air Force, Navy, or Army.

Some key considerations:

Loans covered under the MLA cap out at 36% APR.
Creditors cannot charge a prepayment penalty.
Lenders cannot require active service personnel to give up their legal rights under federal or state law.
The Act covers most types of consumer loans, including payday loans, title loans, deposit advance loans, installment loans, and overdraft lines of credit.
The Military Lending Act does not cover mortgage or mortgage refinancing loans, home equity loans, auto loans, or certain personal property purchase loans.

Learn more about your rights at consumerfinance.gov. If you believe your rights have been violated, contact your state attorney general’s office.

READ MORE: What is the Truth-in-Lending Act?

The Bottom Line

If you’re reading this, you’re probably interested in taking out a payday loan. The best advice we can offer is don’t do it. The vast majority of payday loan borrowers end up filled with regret. Don’t become one of them.

FAQs

What Happened to LendUp?

Online payday lender LendUp recently announced that it has reached an agreement with the Consumer Financial Protection Bureau and it will stop issuing new loans. LendUp had been the subject of multiple enforcement actions from the CFPB, most recently a 2020 lawsuit that accused LendUp of violating the Military Lending Act. You can read more about the shuttering of LendUp here.

What Happens if You Pay a Payday Loan Late?

Payday lenders target underbanked, low-income, and minority groups, so it’s no surprise that most borrowers are unable to pay off their payday loans on time. If you fail to pay your loan, you may have to take out a second payday loan to cover the first, which means higher interest and fees.
The lender may also try to automatically withdraw the payment from your account, resulting in transaction and overdraft charges. Eventually, your account may go to collections, which could damage your credit score. In extreme cases, the lender may take you to court where your wages could be garnished or your property seized.

Can You Go to Jail for Not Repaying a Payday Loan?

Although you will not go to jail for defaulting on your loan, you could be arrested for ignoring a court summons. Even then, you will most likely be released within a few hours or days, as long as you agree to appear in court when requested or you pay the bail money.

How Long Do You Have to Wait Between Payday Loans?

You can apply for a new payday loan as soon as you pay off the previous one. If you can’t pay off your current loan, your lender may let you roll it over into a new one.

If I Owe a Payday Loan, Can I Get Another?

Different lenders have different rules. But most lenders allow you to take out multiple payday loans at once. However, taking out several payday loans is risky and could cause you greater financial hardship later.

What is the CFPB Payday Lending Rule?

The Consumer Financial Protection Bureau’s payday lending rule tries to regulate consumer loans and prevent unfair or predatory practices. This rule applies to short-term loans, longer-term balloon-payment loans (or extension of credit), and longer-term loans. The CFPB’s purpose is to protect consumers and provide them the resources they need to make informed financial decisions. For more information, check out the CFPB’s official rule here.

What is the Difference Between a Payday Loan and an Installment Loan?

Installment loans are short-term loans that can be paid in installments over a period of time. Payday loans are generally not considered installment loans because they are repaid in one lump sum. However, some lenders offer payday loans with the option of repaying them in installments.

How do I Get Out of Payday Loan Debt?

Although it’s tough to get out of payday loan debt, it’s not impossible. If working overtime or taking on an extra side gig or two isn’t an option, consider payday loan consolidation or a debt consolidation program. Alternatively, you could seek non-profit credit counseling to help you make a repayment plan. If you have multiple loans, prioritize those with high interest first.

What is the California Deferred Deposit Transaction Law?

A deferred deposit transaction is another name for a payday loan. California has a specific law restricting payday loans.
Under the CDDTL, a payday loan borrower writes a personal check to the lender at the time the loan is issued. The maximum amount of that personal check is $300. The lender’s fee cannot exceed 15% of that check amount. For example, a California resident who gives the lender a check for $300 will take home $255 if the lender charges the maximum fee. In addition, the term of a payday loan cannot be longer than 31 days.

How Do Payday Loans Work?

Most Popular Storefront Payday Lenders (by search volume)

Advance America

Pros:

Cons:

Speedy Cash

Pros:

Cons:

Check Into Cash Inc.

Pros:

Cons:

Ace Cash Express

Pros:

Cons:

Check ’n Go

Pros:

Cons:

Most Popular Online Payday Loans (by search volume)

OppLoans

Pros:

Cons:

Rise Credit

Pros:

Cons:

Net Credit

Pros:

Cons:

Credit Ninja

Pros:

Cons:

Possible Finance

Pros:

Cons:

CashNetUSA

Pros:

Cons:

Payday Loan Qualifications

Should You Get a Payday Loan?

Payday Loans and your Credit Score

What are Your Payday Loan Alternatives?

Military Service Members Have Special Protections

The Bottom Line

FAQs