Best Payday Loans
Why Use Payday Loans?
Editor’s Note: Top Ten Reviews recommends avoiding payday loans as much as possible and suggests looking for alternatives before getting one. If you are looking for a payday loan to pay bills or other expenses, we recommend exploring getting a personal loan. Before applying for a payday loan for an emergency expense, we recommend considering a cash advance on your credit card or an overdraft line of credit. If you’re considering a payday loan because you have inconsistent paychecks, we recommend checking out some new apps that help even out paychecks. Many credit unions offer payday alternative loans that are less expensive. If you already have payday loans and continue to roll them over, we recommend contacting a credit counseling agency.
All the lenders we review are direct lenders that comply with all applicable state laws. Even so, again, we caution against using these services because they are expensive and carry the risk of trapping you in a cycle where you need to take out new loans to pay off your previous ones.
We recommend exploring alternatives before getting a payday loan. These are expensive loans with high fees, and they can catch you up in a cycle of taking out new loans to pay off previous ones. Each state regulates payday loans differently – some outright ban them. As such, depending on where you live, the costs vary widely. With this in mind, our pick for the top payday lender is Check Into Cash. It is the most broadly available lender, with stores and online loans available in 32 states. It offers a variety of payday loans, installment loans and lines of credit.
Check Into Cash is one of the most widespread payday lenders in the country, offering payday loans, installments loans and other financial services to customers in 32 states. Payday loans aren’t legal everywhere, and in some states, Check Into Cash may offer different services. Because it has the broadest service area, reasonable fees for a payday lender and an array of financial services, it is our pick for the best lender overall.
Keep in mind that even the best payday lender is still extremely expensive, and you should try to find other options before visiting one. Fees vary depending on state regulations. In some states, such as Oregon, you pay around $13 for every $100 you borrow. In other states, such as Texas and Wisconsin, Check Into Cash charges $25 for every $100 you borrow. This puts the lender at about the industry average for payday loan fees. It doesn’t appear to take advantage of states with less stringent payday lending laws like Utah. We didn’t see fees greater than $25, which, while expensive, isn’t the highest we saw in our research.
In some states, Check Into Cash only offers online loans. The application process is similar to an in-store loan, but it can take up to two business days to receive your cash. In-store loans give you immediate access to the money you need.
Best Value-Installment Loans
Getting the best rate on a payday loan can be hard. In some states, most lenders charge the maximum they are legally allowed. RISE offers loans that are similar to payday loans but with longer terms and lower costs. Its installment loans cost significantly less than installment loans offered through payday lenders.
RISE operates in 17 states, and the maximum amount it lends, as well as rates and terms, vary from state to state. APRs range from 36% to 299%, which is high, but most payday loan APRs hover around the 500% range. The most expensive loan from RISE costs around $12 per $100 you borrow, which is on par with the lowest cost for a regular payday loan.
In addition to low costs relative to payday loans, RISE offers advantages to repeat customers. If you show a history of reliably making payments, any future loans you take out will have lower APRs.
RISE also offers tools to help you build your credit. You can sign up for Credit Score Plus, which lets you check your TransUnion score and sends you alerts when something impacts your credit. Having bad credit can close avenues to less costly loans, so having tools that help you improve your credit can help you avoid paying the expensive rates payday lenders charge.
Best Online Loans
Many payday lenders offer loans through online portals, including CashNetUSA. Getting a loan online offers some advantages over visiting a retail location: There are no lines and no travel, and you can get a loan if you live somewhere that doesn’t have payday loan locations nearby. With loans available in 28 states and rates that compare favorably with other payday lenders, CashNetUSA is a good place to consider.
Payday loan rates vary from state to state. In states like California and Alabama, where there are legal limits, CashNetUSA charges the maximum amount allowed. Some states, such as Wisconsin, have no limit on payday loan rates. The highest rate we saw CashNetUSA charge was $25 per $100 borrowed, which is standard, though other lenders charged as much as $30. The lowest amount we saw from CashNetUSA was $9 per $100 borrowed, which is one of the lowest amounts.
Applying online is easy, and you receive an approval decision quickly, sometimes in as little as five minutes. To apply, you need to be at least 18 years old and a U.S. citizen as well as have a verifiable source of income and a checking account.
In some states, CashNetUSA offers different products, including installment loans or lines of credit. Installment loans have high rates like payday loans but can be paid back over a longer period. Lines of credit are also expensive, but you only have to repay the amount you use.
Best Lines of Credit
Instead of getting a payday loan, you can apply for a line of credit, a service Speedy Cash offers in select states. A line of credit differs from a payday or installment loan in that you only pay interest on the amount you use, not the total you’re eligible to borrow. Like payday loans, the fees you pay on a line of credit vary from state to state – depending on the regulations in your state, you can end up paying as little as $13 or as much as $22 for every $100 you borrow. An advantage of a line of credit is you only draw the money you need and only pay back what you borrow, which gives you some flexibility.
Best Storefront Lender
There are some advantages to going to a storefront location to get your payday loan, and Check ‘n Go is one of the best options for those situations. If you apply for a loan at a retail location, you get your money immediately. On the other hand, with an online loan you have to wait at least until the next day for the money to deposit. Check ‘n Go has locations in 23 states and offers a variety of additional services, including check cashing, prepaid debit cards and installment loans. Fees vary from state to state. We saw some as high as $30 for each $100 borrowed and others as low as $10 per $100 borrowed.
Why Trust Us
Top Ten Reviews has written about payday loans for 12 years. We also take great care to keep our eyes open for alternatives. Payday loans have high fees, but because the application process is quick, the lenders don’t run credit checks and these services have many locations, they fill a niche in the financial environment.
Though regulated at the state and federal level, there are still payday lenders that attempt to skirt the rules. Some are online-only lenders based in other countries. Other lenders work around state laws by operating out of Native American reservations. Be wary of brokers that offer to connect you with lending partners – this can result in a lot of calls and emails about offers.
We stuck with direct lenders who comply with state laws. A good way to tell if a lender follows the rules is if its website asks what state you live in before giving you a quote. If a lender says all loans have the same fee no matter where you live, that’s a tipoff you may be dealing with a less-reputable lender you should avoid. We didn’t include any of those lenders on our lineup.
How We Tested
Because every state regulates payday loans differently and each lender operates in different states, there’s no one-size-fits-all pricing. Some states have limits on how much a payday lender can charge, some have no limits and some have enough regulations in place that payday lenders don’t operate in them. This makes evaluating lenders on their rates difficult. With that in mind, we looked for the highest and lowest fee each lender charges. This gives a good baseline for how much you can expect to pay and how these lenders approach state regulations, especially in the states with no regulations. The fees we list apply to a $100 loan for a 14-day period. Many of these lenders offer additional products, including installment loans, lines of credit and check cashing. Installment loans are paid back bi-weekly or over several months. They are larger than payday loans but are often as expensive or more so. Over the course of paying back an installment loan, you often pay double the amount you borrowed. Some of the lenders we looked at, including RISE and LendUp, offer installment loans that have lower rates than standard payday loans.
We also looked at the number of states each lender serves. In most of the Northeast and throughout the South, payday loans aren’t legal.
Many lenders offer online loans in addition to having retail locations. An online lender has some advantages over a retail location. For example, you can apply from your home, and online loans are more widely available. The drawback is you have to wait one to two business days for your funds to deposit. If you get a loan from a physical location, you get your money immediately.
What Are The Rates on a Payday Loan?
Often, you see APRs listed for payday loans as high as 600%. Because you pay the loan back in two weeks to a month, the APR serves mostly as a gauge of how expensive the loan is. Payday loans charge a finance fee, which ranges from $10 to $30 for each $100 you borrow. We chose to include this fee rather than APRs to give you a better idea of how much you’ll end up paying if you decide to get a payday loan.
Alternatives to Payday Loans
You often hear that payday loans are something people turn to when there’s an emergency expense like a car accident or medical emergency. That’s not necessarily true. In a study on payday loans, the Pew Charitable Trust found that 69 percent are used to pay for recurring expenses like utilities, food or other bills. The average borrower uses eight loans a year, which last about 18 days each.
If you find yourself in a situation where you're considering a payday loan, explore alternatives first. If you have emergency expenses, consider using a credit card or finding a cosigner for a personal loan. These have lower interest rates and don’t put you in as much of a bind as payday loans. The balloon payment when the term of your payday loan expires can leave you short when your next paycheck arrives, which can force you into taking out another to pay for your expenses. In cases like this, making minimum payments on a credit card, while not ideal, is a better option than being caught in a payday loan debt trap.
Look for a credit union – a non-profit alternative to a bank. Many have begun to offer payday alternative loans, which are like payday loans in that they are for smaller dollar amounts, but they don’t have high fees.
We spoke to John Fairbanks at the National Credit Union Administration who told us that “Many credit unions have their own programs to provide small-dollar, short-term loans, either in lieu of payday loans or as a means of helping members get rid of existing payday loans so they can begin to rehabilitate their credit.” Payday alternative loans are available through federal credit unions and have applications fees that are capped at $20 for the entire amount of the loan. State credit unions also offer similar short-term, small-dollar loans.
Do Payday Loans Affect Your Credit Score?
Unlike most loans, which require a minimum credit score for acceptance, payday loans don’t have any credit requirements. To apply, you need to present proof of income and a checking account, but the lender doesn’t look at your FICO score. Likewise, records of timely payments don’t appear on your credit report. So, a payday loan can’t help you build credit, and applying for one doesn’t impact it, either.
However, there are ways these loans can affect your credit, especially if you can’t keep up with your payments. Part of getting a payday loan involves leaving a post-dated check, or giving the lender access to your checking account if you apply online. When the loan comes due, the lender deposits the check or withdraws what you owe. If you don’t have enough in your account to cover the amount you owe, you could bounce a check or overdraw your account.
Bounced check and overdrafts don’t adversely affect your credit score, but they can prompt lenders to send your loans to collection agencies. Debt collection agencies tend to report unpaid debts to credit reporting agencies. Collections agencies can also sue you over unpaid debt, which can also lead to those debts appearing on your credit reports.
Some short-term payday loan alternatives offered by credit unions and lenders like Oportun do report to credit agencies. If one of the reasons you’re using payday loans is because you have poor credit and can’t get approved elsewhere, these options might be worth looking at.
Refunds Available After FTC Lawsuit Against Payday Lender
In September, the FTC announced a $505 million refund to payday loan customers as a result of a suit against AMG Services, which ran multiple payday lending companies, including 500FastCash, Advantage Cash Services, Ameriloan, OneClickCash, Star Cash Processing, UnitedCashLoans and USFastCash.
If you borrowed from any of these companies between January 2008 and January 2013, you should have received a refund check in the mail. Over 1.1 million people are eligible for refunds. You can learn more by visiting the FTC’s page about the refunds.
The FTC sued AMG for deceptive lending practices. Instead of charging a one-time finance fee as it claimed it would, AMG made illegal withdrawals from people’s accounts and charged hidden fees. All told, these loans had effective interest rates from 700% to 1,000% – far beyond the legal limits for a payday loan.
This case highlights some of the ways unscrupulous lenders take advantage of borrowers. The terms were deliberately misleading and required borrowers to explicitly opt out of renewing the loan. You should avoid a loan that auto renews. AMG also took steps to avoid explaining this process to borrowers when they applied for loans.
Further, AMG Services attempted to sidestep regulation by incorporating on tribal land. This has become a common trick to avoid state regulations. None of the lenders we reviewed use this loophole, and we would recommend avoiding any that do.
Installment Loans Can Carry Extra Costs
A payday loan is typically for a small amount, usually a couple hundred dollars at most, with a high interest rate. If you need a larger amount of money, up to several thousand dollars, an installment loan is an option worth looking into.
Installment loans differ from payday loans by having longer terms and regular payments. With a payday loan, the entire amount comes due at the end of a set period, usually two weeks to a month. Installment loans have high rates – not as high as payday loans but higher than a personal loan or a credit card. Also, like payday loans, there’s no credit check or collateral required to apply.
The Pew Charitable Trust recently published a report on installment loans and how state laws impact them. Like payday loans, each state regulates installment loans differently, though installment loans tend to be less strictly regulated than payday loans.
Pew found that installment loans are about three or four times less expensive than payday or title loans. Often, an installment loan will have payments that are 5 percent or less of the borrower’s monthly income.
This report identified two ways lenders add costs onto installment loans. The first is by adding credit insurance, which can cost up to a third of the loan amount. This is financed into the loans, increasing your monthly payments. Credit insurance ensures the lender is paid if you become ill, injured or otherwise unable to make payments.
Another way lenders increase the amount you pay on installment loans is by adding origination or acquisition fees. This fee is usually a flat dollar amount added at the beginning of the loan. The Pew study saw origination fees that range from 1 to 46 percent of the loan amount. Origination fees vary from state to state, but lenders charge the maximum allowable in each state.
When getting an installment loan, keep in mind that credit insurance and upfront fees affect the actual APR you pay, making it higher than the APR the lender quotes you.
What Are Title Loans?
A title loan is another type of loan that doesn’t require good credit for approval. Like payday and installment loans, they also have high rates. A title loan is secured, meaning you have to put up collateral to get the funds – in this case, the title to your car.
With a title loan, the amount you qualify for depends on an assessment of your car’s value. Loans range from a few hundred dollars to $10,000. A standard title loan is due in full after 30 days. This includes the finance charge, which can be as much as $125 for a $500 loan – that means you’ll pay $625 total when the loan is due. According to the Pew Charitable Trust, the average APR on title loans is around 300%.
Title loans are very risky. Because you use your vehicle as collateral, it can be taken by the lender if you don’t make your payment or come to an alternative arrangement. Often, that means rolling over your loan. The Consumer Financial Protection Bureau studied title loans and found that over 20 percent end in a car being repossessed. Only 12 percent of borrowers pay off the loan without having to renew. More than a third of borrowers end up taking out more than seven loans, meaning they have to pay nearly as much in fees as they borrowed in the first place.
We caution you to avoid title loans. They are expensive and risky and can result in you having to constantly roll the loans over or have your car taken. The loans don’t affect your credit, but getting your car repossessed can stay on a report for up to seven years.