- What states does Possible currently operate in?
- Frequently asked questions about Possible
What are payday loans?
Also called a cash advance, there isn’t a set definition of a payday loan, but they are usually $500 or less and repaid with a single payment on your next payday. They are often used to get additional cash when an urgent situation arises, like covering an unexpected bill or paying rent. These loans are available from lenders in brick-and-mortar stores and from online businesses. Different lenders offer different rates and options, and some companies, like Possible, are significantly different from traditional payday loans due to repayment flexibility, the ability to build credit, and other options. This brief guide will cover applying for a payday loan, repayment, and different types of loan options that are available.
Applying for a payday loan
Applying for a payday loan requires verifying your income and a bank account with a lender. The lender reviews your pay stubs to determine if they think you will be able to repay the loan. They usually don’t consider other income sources, such as cash-only jobs. A benefit of applying for payday loans is that they sometimes do not require a credit check to receive the loan, so people with low credit scores can still apply. After your income and paydays are confirmed, the lender will issue the loan in cash, with a check, or in a direct deposit to your bank account.
Regulations for payday loans
There are a couple exceptions to the application process. Due to federal regulations, active duty military personnel are not eligible to receive payday loans because interest rates for these loans are higher than the allowed amount. Additionally, some states, such as Florida and Washington state, have databases that keep track of how many payday loans an individual receives and prevent lenders from issuing loans to people that do not meet the requirements. Regulations governing these loans often change. For example, in 2019 Ohio changed its payday regulations to cap the amount of fees that a lender can charge for each loan and extend the time a customer has to repay the loan.
Repaying a payday loan
Payday loans are usually repaid two to four weeks from the date the loan is taken out. Lenders usually require a post-dated check or ACH transaction for repayment. Payments are dated for your next payday, so they can be cashed when your deposit arrives to repay the loan. ACH withdrawals are scheduled for the next pay day as well. With Possible, loans are repaid over eight weeks in installments and payments can be rescheduled if needed within a mobile app.
Typical payday loan fees
A typical loan will include the amount of the loan principal, interest or fees on the loan. Fees are usually between $15 and $30 for every $100 borrowed depending on the state regulations. For example, if Zach takes out a loan in Utah state for $300, he will be charged $60 in fees ($20 per every $100) payday loans New Jersey for a total of $360. Many lenders also charge late fees, so Zach could end up paying more if he’s late on his payments, depending on his state.
Why use a payday loan?
People use payday loans for a variety of reasons. Emergency expenses can come out of nowhere, or it might be nice to borrow a little extra cash for a vacation. In addition, payday loans usually don’t require a credit check, so are available to people with bad credit when they need it. The disadvantage of this type of loan is that when they are paid off, it doesn’t help improve your credit, though companies like Possible report successful payments to the credit bureaus and can build credit scores over time.