Checklist for Getting a Safe and Secure Payday Loan

Melissa Horton
by Melissa Horton
Published: February 24, 2020

Payday loans, also known as short-term loans, offer a quick and often easy way to get financing for immediate, small-dollar needs. If you’ve received an unexpected bill in the mail, have a major car repair to take care of quickly, or simply need cash to cover life’s anticipated expenses, a payday loan may be beneficial.

However, there is plenty of payday loan offers from less than reputable lenders that do little more than harm your financial life in the long run.

To avoid getting a payday loan that will cost you more than you bargained for, it is essential to know what the requirements are for getting a legitimate loan, the things to consider when choosing a payday loan, and how to go about finding the right lender. Understanding these aspects of an online short-term loan will make getting a safe payday loan easier when you need it.

First, though, you should know when it makes sense to get a payday loan.

When to Get a Payday Loan

Payday loans should be used as a last resort for covering financial emergencies. They offer smaller loan limits than installment and personal loans, often no more than $1,000, and so should only be used for short-term cash needs.

However, before getting a reliable payday loan, it may be worthwhile to determine other suitable options. Some alternatives to payday loans that often have lower or no costs include:

  • Requesting payment extensions through your creditors or bill providers.
  • Earning additional income from a side job, such as offering ridesharing or freelance work.
  • Checking local organizations for assistance with basic needs, including food or rent.

These resources should be researched before seeking out a payday loan because the cost of short-term borrowing can quickly add up. Many payday lenders charge triple-digit interest rates when all fees are included, and additional expenses may be added on if you extend the loan repayment to the next pay period.

Alternatives to Payday Loans

Alternatives to payday loans exist, each which comes with their own set of advantages and drawbacks. Here are a few to consider before rushing to get one hour loans through a payday lender.

Negotiate a Payment Plan – if you need a payday loan for fast cash to cover an unexpected bill, check with the creditor about payment plan options. They may be willing to let you make payments in installments instead of in a lump sum, and possibly with little to no interest charges.

Personal Loans – unlike payday loans, personal loans offer larger loan amounts with longer repayment periods, but a full credit check is required. Personal loans often come with lower interest rates, and in some cases, fewer fees, although the process can take longer than a payday loan.

Short-term Loans – some regional and local credit unions or banks offer short-term loans with similar loan amounts to payday loans, but without the hefty price tag. These payday loan alternatives can be more cost-effective in the long-run, but you may need to have strong credit to qualify.

Credit Card Cash Advance – some credit cards allow cardholders to take a cash advance up to their available limit. These resemble cash advance loans online, except they are offered through a current credit card. Cash advances come with fees, typically charged as a percentage of the amount received, plus a higher interest rate than the standard rate on purchases. A cash advance does not require a credit check, and it provides same-day access to funds.

Alternatives to Avoid

Additional payday loan alternatives, including long-term payday loans and auto title loans, are also available. However, these options are rarely in your best interest. Long-term payday loans may have repayment terms extending three years, but interest rates are just as high as short-term payday loans. Auto title loans offer an easy way to get cash so long as you have a clear title to a vehicle in your name. However, failure to repay the loan allows the lender to take possession of your car to offset losses.

If you feel there is no other option except a payday loan, here’s what you need to know about how to do so safely with a quick payday loan checklist.

The Requirements for Getting a Payday Loan

Payday loans are different from longer-term, more conventional loans from online lenders, banks, or credit unions because they are meant to be repaid in a short period. Your repayment term is typically two weeks, based on when your next paycheck will arrive.

Payday lenders will want to connect to your bank account to recoup payment once you are paid next. Because of this structure, you will need to the following to secure a payday loan:

  • A recent paystub
  • An active checking or savings account
  • A photo ID
  • A contact phone number or e-mail address
  • Meet the minimum age requirement (18 in most states)
  • Social security number and date of birth
  • Home address

Lenders that provide payday loans do not require a credit check, but the other conditions are a must. They need to feel confident that you can repay the amount you borrow by the time your next paycheck hits your account, and that they can get in touch with you if payment is not successful.

However, only legitimate payday lenders will require all of this information. If they do not, this may be a sign you are not working with a credible payday loan provider. Also, you will want to pay close attention to the features of a payday loan to ensure it fits your needs.

What to Consider When Choosing a Payday Loan

Before getting a safe payday loan, you’ll want to take a close look at the agreement you make with the lender. Here are a few items to consider along the way:

Financial Position

Your financial position plays a crucial role in the affordability of a payday loan. If you borrow a large amount to cover expenses in the short-term but cannot feasibly repay the loan plus fees, you’re likely to get into a vicious cycle of debt. Consider how much you can realistically repay before borrowing.

Total Cost of Borrowing

This includes the interest rate and any fees attached to taking out a loan, often expressed as the annual percentage rate (APR). This will be high with legitimate and non-legitimate lenders, but a safe payday loan provider will state the APR in the paperwork or online agreement you sign.

Loan Extension Options

While it is not recommended to take out a payday loan you cannot repay in the short repayment term, legitimate payday loan lenders may offer an extension option. This means you can extend the loan to the next pay period, but at a cost. Be sure to ask about extension options and the fees associated with them.

Secure Loan Application

Giving out sensitive personal details over an online platform is risky no matter what type of lender you work with.

However, getting a secured payday loan means ensuring the information you provide to the lender is secured whenever possible. If you’re unsure, ask the lender if its website is safe and look for the lock icon on the web address bar to verify.

State Regulations

Depending on where you live, specific regulations dictate what is legal and what is not with payday loan lending. Be sure to understand these state guidelines relating to what is required of you as the borrower and what your payday lender is required to provide you in terms of details about your loan.

How to Select the Right Payday Loan Lender

Unfortunately, many scam artists exist in the online and short-term lending world, offering too-good-to-be-true loans that ultimately cost you an excessive amount. The best online payday loans do not come from lenders who reach out to you out of the blue or those who require up-front payment. If a lender asks for money to be wired to them in advance or as a form of payment, or if communication from them is full of misspelled words and confusing sentences, you may be dealing with an unsafe or illegitimate lender. Additionally, lenders that say they offered guaranteed payday loans no matter what require a little extra research to ensure they are legitimate.

To avoid such scams in getting a safe payday loan, including bad credit payday loans, look for the following characteristics to ensure you’re working with the most trusted payday loans online or in person.

Contact Information

All legitimate payday loan providers should have contact information readily available on their website. This includes a phone number, physical address, and in some cases, an e-mail address. If a lender does not have these details posted, use a different loan provider.

Licensed with the State

Short-term lenders, including those operating online, are required to be licensed and registered with the state where the borrower lives. You should check local state licensing or financial agency databases to search for a lender before applying for a payday loan.

Registered with Accreditation Organizations

Another way to verify you are getting a safe payday loan is to look for accreditation with a business agency. For example, BBB accredited online payday loan lenders to be searchable through the Better Business Bureau’s website. You can find there customer reviews alongside the history of the lender.

Loan Use is Not Limited

Legitimate payday loan lenders do not put restrictions on how you can utilize loan funds. If a lender places limitations on what you can use the money for, use a different lender.

No Up-Front Payment Required

Safe online payday loans also do not require you to pay anything up-front. The fees as paid as part of the repayment of the loan, not as a single payment before you receive loan funding. Avoid using a payday loan lender that asks for an up-front fee.

Final Thoughts

Getting a safe payday loan is possible if you take the time to verify the legitimacy of the lender and understand what you need to qualify for a loan. Before signing on the dotted line, be sure to evaluate your alternatives to payday loans first, and create a plan for repayment to avoid additional fees for an extension before accepting a loan.

References and Sources
  1. “How can I tell if a payday lender is licensed to do business in my state?” –

  2. “Know Your Options: How to Skip or Defer a Car Payment” –

Melissa is a financial literacy professional who is passionate about educating individuals and business owners about the power of smart money management.

She has used her undergraduate degree in finance and her MBA in marketing to establish a comprehensive financial planning firm serving clients in Washington, DC and the surrounding area.

During her 13 years in the financial services industry, Melissa has taught thousands of clients how to create and sustain financial freedom through better understanding what their money has the potential to do for them. In addition to working with clients, Melissa contributes financial literacy and money management articles for several publications across the web.

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