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Payday loans direct lenders are payday loans you borrow directly from a lender. Payday loans are usually short-term, high-interest loans to be paid on or before your next paycheck. With payday loans from direct lenders, there is no middle man in this process.
Nowadays, there are various lending networks and peer-to-peer lending out there. While these networks can be helpful, they can also make things more complicated.
If you already know of a lender you prefer, a lending network may not be necessary. When you use a lending network, you often have to fill out multiple applications. Plus, you could initially be approved by the lending network, only to find out the lender itself won’t approve you.
This is not to say lending networks can’t be useful; they certainly can be. But using payday loans from direct lenders can be much simpler.
Payday Loans Overview
How Payday Loans Work
What is a Direct Lender?
If you were to walk into one of these stores that offer payday loans near you, that would be a direct lender.
Going to your local credit union or bank would also be a direct lender, but payday loans are not usually offered at these banking places. More recently, some banks are trying to offer their version of payday loans, but they probably won’t offer them under that name.
Payday Loans Near You
Payday Loans Online
Another way to find a payday loan is online. Since the approval decision generally isn’t based on much other than your credit history, applying online is a perfectly good option.
However, as you can probably imagine, some online payday loan providers are more virtuous than others. Because online transactions eliminate face-to-face interaction, scamming people is sometimes easier. Thus, you probably shouldn’t go borrowing from just any random payday lender online.
Here are some of the best ones I found:
If you’re looking for payday loans direct lenders, any of the above options should work. Finding an ethical payday lender is essential because payday loan borrowers often get stuck in a “debt cycle.” As a borrower, you want to find a lender that is willing to work with you based on your situation.
Are Payday Loans Bad?
The best answer I can give: not necessarily. In theory, there is nothing wrong with payday loans. Lenders will loan money to borrowers based on their risk profile. However, payday loan borrowers are often economically disadvantaged.
After all, their more well-to-do peers probably have more savings they can fall back on. Remember, payday loans are usually for amounts less than $1,000. Since your emergency fund should cover 6-8 months of expenses, an adequately stocked emergency fund should cover that amount easily.
Needless to say, those who are seeking payday loans don’t have that kind of savings. These are often low- and fixed-income people who a very tight budget.
Because money is tight to begin with, they may borrow money on a payday loan but be unable to pay it back. And those less ethical lenders will have no problem rolling unpaid balances into a new loan. In fact, they may even encourage it.
So, payday loans are not necessarily bad. In theory, they are fine. In theory, the borrower repays them and everyone is happy.
But things often don’t work out that way in the real world.
Are Payday Loans Legal?
It depends upon where you live. Although the Dodd-Frank Wall Street Reform and Consumer Protection Act gave the CFPB the authority to regulate payday loan lenders, these laws are usually established at the state level.
In other words, whether payday loans are legal depends on your state regulations. Several states prohibit payday loans altogether, others place limits on them.
See this list to find our your state’s current laws regarding payday loans. If the “statutory status” is “prohibited,” then payday loans are not legal in your state.
Pros and Cons of Payday Loans
There are pros as well as cons for payday loans. They are understandably quite a polarizing topic, but the reality is that there are both good and bad things about them.
Payday Loan Pros
- Fast access to money; potentially same-day funding
- Available to almost anyone regardless of credit history
- Convenience – usually many physical locations, plus online
- Many direct lenders available
But with those pros come many cons as well. For example:
Payday Loan Cons
- Payday loans usually have very high interest rates
- Buyers who are unable to repay may be rolled into a new loan, meaning even more is lost to interest
- High potential to hurt a borrower’s already low credit score
Payday loans are one of those things that sounds like a good idea on paper, but in the real world can be quite messy. They are helpful in theory, but repaying them on-time and in full is critical. Not doing so has the potential to keep people in poverty indefinitely.
Can Payday Loans Garnish Your Wages?
Conclusion on Payday Loans Direct Lenders
Payday loans direct lenders means obtaining a payday loan directly from a lender. In other words, there isn’t a middleman involved.
Payday loans are usually small-short term loans paid out in cash. In exchange for the money, the borrower agrees to pay the loan in full on or before their next paycheck. If the borrower is unable to repay it in time, their loan may be rolled into a new one.
While in theory there is nothing wrong with payday loans, they do have a history of “trapping” people. Repaying them in time is critically important.
Do you have an experience with payday loans, specifically with direct lenders? Let us know in the comments.
Hey there. My name is Bob Haegele and I'm an expert at frugal living and saving money. I’m also an EV enthusiast and have recently become mostly-vegetarian. Another thing I started doing recently? Dog walking. I’m working toward financial independence making money via my own ventures. Interested in starting a blog of your own? Check out my post on starting a blog.
