A recent survey by Salary Finance found that one out of three Americans run out of money before payday—and this affects people from all income levels. Find out what’s causing this crisis, how a payday loan can fill the gap, and a simple definition of a payday loan. Learn more about the national crisis and how an Alabama Title Loans, Inc. short-term payday loan can be the answer for your financial needs.

Definition Of A Payday Loan

Online payday loans are a type of short-term loan that could help you bridge a financial gap between paychecks by getting you the cash the same (or the very next) business day you apply.

Like other financial services, payday loans are designed to meet a specific need. In this case, it’s filling the financial gap between paychecks. You can borrow from $100 to $500, which can cover urgent expenses like groceries, utilities, rent, small repairs, or other personal needs.

The National “Payday Crisis”

Salary Finance said that there are many valid reasons why even frugal Americans are struggling every payday.

The biggest culprit is inflation: the cost of basic essentials like food, rent, gas, and utilities has almost doubled in the last year.

While low-income families are eligible for government aid, there are millions more who can’t qualify but are struggling to stretch their budget to keep up with higher prices. Some months, they’re able to get by. However, when they’re hit by seasonal expenses like heating costs going up during winter, or emergency expenses like medical care, they run out of cash.

How To Qualify

Banks go thorough credit checks before they approve a loan application, and will require a credit report, employment records, income statements, and other financial documents. Sometimes they will ask you to present collateral or ask someone to co-sign your loan.

However, payday loans have easier and more flexible criteria for approval. You can get one even if you have a low credit score, or do not own any property for collateral. As long as you have a job and can present a pay stub to show your income, you can apply.

Requirements

You only need a few basic items to apply. Take a moment to collect:

• Government-issued photo ID, such as a driver’s license, passport, or military ID
• Social security card
• Your most recent pay stub
• Your most recent thirty-day bank statement from a checking account that is under your name
• A blank check from a checking account that is under your name

Definition Of Payday Loan Vs Other Personal Loans

It may be easier to understand the definition of a payday loan if you compare it to other types of personal loans.

• Payday loans vs installment loans. Payday loans have small amounts that are paid off in a lump sum on your next payday. Installment loans have larger amounts that are paid off in installment loans over several months. However, installment loans usually require a credit check.
• Payday loans vs secured loans. Both payday loans and secured loans do not require a high credit score. However, secured loans require some form of collateral, such as a vehicle title. Payday loans do not require collateral, though the loan amount is significantly smaller.
• Payday loans vs. line-of-credit. Payday loans have a fixed amount and date for payment. Line-of-credit loans have a credit limit, and you can borrow any amount at any time. When you pay off the loan, the credit limit is “reset” so the full amount is available to you again.

Another way of looking at the definition of a payday loan is to compare it to a cash advance. For example, when you ask your boss to pay you ahead, that amount is deducted from your next paycheck. However, with a payday loan, you get the money from the lender and issue a post-dated check instead.

Benefits Of A Payday Loan

Payday loans have helped many Americans who can’t qualify for financial aid or other types of loans.

• No minimum credit requirements. You can apply even if you have bad credit, or don’t have a long credit history.
• Fewer employment requirements. Some banks will ask for a certificate of employment that states your income, position, and how long you’ve been with the company. That can be difficult to get if you are a part-timer or freelancer, or you work for a small business that doesn’t have a formal HR department. In contrast, the only employment document you need to present for a payday loan is your most recent pay stub.
• Fast application process. Payday loans can be processed and approved on the same day of application. You don’t have to present a lot of documents or wait a long time to find out if you qualify.
• Fast payouts. Banks (and even some online lenders) will need several days to process the application. With payday loans, you get the money the same day or the next business day.

How To Get A Payday Loan Right Now

Alabama Title Loans, Inc. is a trusted lender with branches all over the state. We provide same-day (or in some cases, next business day) payday loans, so you can get emergency right away.

Just fill out the online inquiry form, and our loan representative will call to explain the payday loan process and answer any questions you may have about the definition of a payday loan. Then, you just need to bring your documents to the branch for verification and some paperwork—a process that takes just half an hour!

If your loan is approved, you will receive the money on the same day or the following business day. Inquire now and take the first step to getting emergency cash.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.