A payday loan is an emergency-type of unsecured short-term loan that matures upon the date of your next payday at work. There is no collateral required for a payday loan. You would only be required to provide proof of employment and proof of a bank account and a debit card in order to apply for a payday loan. Payday loan stores do not check your credit history or your credit rating. For the most part, getting a payday loan is quick and easy.

Do not assume that just because payday loans are quick and easy and that your credit history is not checked that you automatically qualify for a payday loan. You can actually be turned down for a payday loan.

If you don’t have a checking account or if you don’t have direct deposit on your payroll checks, payday loan stores will turn you down. If your monthly income isn’t high enough you can be turned down for a payday loan. If you’ve been looking around on the internet and sending inquiries and applications to several payday loan sites, you will be turned down. Too many inquiries show up and lower your credit score.

Most payday loan stores require that your monthly income be a minimum of $1000. Also, the payday loan amount generally can not amount to more than about 15% of your monthly income. Therefore, if you need about $750 and you make $1000 a month, you will only be allowed to get a payday loan in the amount of around $150.

When you do receive your payday loan, it is advisable to pay it off with your next paycheck. If you cannot pay it off, the payday loan store will allow you to pay another fee and wait to pay the principal on your next payroll date. Or, if you cannot pay the entire payday loan amount, pay the fee and part of principal. Eventually the payday loan lender will require you to start paying on the principal anyway. The quicker you can reduce the principal, the quicker you can pay off the payday loan.

It is very important to talk to your payday loan lender. If you are upfront and honest with them when you cannot pay the payday loan off right away, they are more willing to work with you and keep your payday loan in good standing. If you have worked well with your payday loan lender, you have a better chance of getting another payday loan in the future if you need it.

You might think it is easier to just pay the payday loan fee and put off the principal until a later time. Be careful. When you put off paying your payday loan, the high annual percentage rates (APR) add up quickly and you will find that you are unable to keep up with your payments. You will then be on a path to financial disaster that could ruin your financial health, hurt your family and even cost you your job.

The best advice is to avoid a payday loan in the first place. Look to other sources like overdraft protection on your bank account, keeping a savings account, using a credit counselor for financial advice, or talk to your other creditors to see if you can get additional time to make payments to them. You could even have a garage sale. It would be better to sell some of your personal assets than to let a payday loan cost you hundreds of dollars or more in payments for several years.