What Is a Payday Loan?

Understand how payday loans work, why some borrowers use them, and the key risks to watch out for before you apply.

A payday loan is a small, short-term loan meant to cover expenses until your next paycheck. These loans are easy to qualify for and provide fast access to cash, but they often come with higher fees.

How Payday Loans Work

  • Borrow roughly $250–$3,000, depending on the lender and your state.
  • Repay the balance in full on or around your next payday.
  • Approvals are usually decided in minutes.
  • No collateral is required — approval is typically based on income and bank activity.

Why Borrowers Choose Payday Loans

  • Very fast access to cash for urgent expenses.
  • Minimal documentation and basic eligibility requirements.
  • Many lenders are willing to work with poor or thin credit histories.
  • Simple applications that can often be completed in a few minutes.

Risks to Consider

  • Higher fees and APRs than longer-term installment loans.
  • Very short repayment timelines, usually tied to your next paycheck.
  • If you roll over or refinance repeatedly, payday loans can create a cycle of borrowing that is difficult to break.

Ready to start your application? It only takes a few minutes to request funds securely.