This is how the process works – say you need a loan of $100 and its 10 days to your next paycheck. You could walk into a payday loan center or select a payday loan lender online. There are plenty of lenders offering varying interest rates so it’s a good idea to shop around before picking one. The payday loan company will have you fill out a form that verifies that you are employed somewhere, you have a checking account and your salary meets a minimum requirement to pay back the loan. There is no credit check or any verification of pending liabilities, so even people with bad credit scores can get a cash advance. The next step is to return the filled out form and wait for your loan approval. This typically takes place within 24 to 48 hours and you receive the cash from the center or through your bank account, as described above.

When you receive payday loan approval, your creditor will ask you for a post dated check, i.e. a check that is dated and may be cashed only after a certain future date – say, 2 weeks later, when you are sure your paycheck will be credited to your account. The check amount will be the initial principal amount of $100 and the interest charges, say $15 for a 2 week loan. While $15 doesn’t sound like too much, it is approximately 390 percent APR – a high interest rate. At the end of 2 weeks, the creditor can cash the check and receive $115 or you have the alternative of rolling over the loan for another stipulated amount of time for a predetermined fee. However, some states do not allow rollovers or limit the number of rollovers on payday loans. Most commercial banks do not offer payday loans, so you will most likely go to a licensed payday lender.