What’s The Definition Of A Payday Loan? Simple Terminology for New Borrowers
As a new borrower, understanding the payday loan terminology and the payday loan definition can feel like a daunting task. But luckily, you've found our handy beginner's guide to the definition of payday loan and its key terms.
In the following sections, you'll learn about payday loans and develop an understanding of all the related words and phrases used in a payday loan’s paperwork.
A Simple Payday Loan Definition
The definition of a payday loan is an unsecured short-term loan that is borrowed against your paycheck. It is an advance on your paycheck and is usually due by the next pay period. It allows you to fund unforeseen emergency circumstances, such as:
- Medical bills that were higher than expected or completely unexpected
- Overdue utility bills
- Missed mortgage or rent payments
- Car repairs
- Home repairs
Payday loans are usually for small dollar amounts. Many lenders offer a maximum of $500. But with Fast Payday Loans, Inc., you can borrow between $100 and $1,000.
The process is very straightforward, allowing you to complete it either at home over the phone or by coming into a store. The loans come with simple requirements since they don't rely on your credit score to establish your ability to repay the loan.
Common Features of a Payday Loan
- The loans are for small dollar amounts.
- Payday loans are normally repaid on your next payday.
- You can get payday loans with a poor credit score.
- You can use them to fund emergencies but should avoid the temptation of borrowing to fund frivolous purchases, gift-buying, or vacation shopping.
Our Payday Loan Requirements
We don't ask you for lots of documents you may not have. Instead, we request three things from you, regardless of whether you apply over the phone or at one of our brick-and-mortar locations:
- Government-issued identification — Feel free to use any in-date type of ID that shows your portrait, like a passport or driver's license.
- Most recent pay stub — This shows us you can afford to repay the loan. We don't conduct hard credit inquiries, so it is how we determine your affordability.
- Blank check — We use this to deliver the money we have agreed to lend you.
Payday Loan Key Terminology You Must Know
The financial world can be filled with jargon. You'll come across many unfamiliar terms when seeking a payday loan, so we'll provide definitions for them here.
Annual Percentage Rate (APR)
The Annual Percentage Rate or APR is the yearly cost of credit represented by a percentage.
Consider it a broad measure of how much you will end up paying to borrow money. It also reflects the fees that you must pay to acquire the loan.
As we're sure you can guess, the higher the Annual Percentage Rate, the more you will pay over the lifetime of the loan. However, since a payday loan is usually paid back within one month, it can be misleading to look at the APR since you won’t accrue annual interest.
A repayment plan allows you to repay the payday loan in smaller installments over a period of time rather than a week or so. Not every lender offers this sort of schedule because it depends on state laws as to whether you'll be provided with an extended repayment plan. On top of that, lenders that do offer them may insist on an additional service fee. When it comes to repaying an online payday loan lender, they take the money from your bank account via an ACH debit transfer.
Payday Loan Lender
A payday lender is a business that offers money through direct loans using your paycheck as collateral. They give you money in advance of when you would typically get your paycheck. This can help with expenses that can’t wait until your next pay period.
We here at Fast Payday Loans, Inc. are an online payday loan lender! In fact, we're an online and in-store lender since you can acquire a loan from us over the phone or at one of our brick-and-mortar stores.
Also Known As…
There are many ways that payday loans can be referred to. It can be helpful to know these varying ways of talking about a payday loan, so you understand they are the same thing. Some of these terms are cash advance loan, check advance loan, paycheck advance, salary loan, payroll loan, and short-term advance to name a few!
Submit Your Payday Loan Request Right Now!
Now that you know the definition of a payday loan, fill out the form found on our website to get the process started. After a loan representative contacts you, it can take less than half an hour, and you'll receive the money you need on the same or the very next business bank day.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.