Payday Loan Direct Lenders

Payday loan direct lenders are lenders who sell loans direct to the public, either through a telephone number, website, offline office, or a combination of each. Payday loan lenders work directly with the customer to provide loans with total lengths of one month or less, with the most common loan being fourteen days—enough time to span until the borrowers next paycheck.

Getting a loan from a payday loan lender isn’t always the least expensive way to finance your spending. In fact, a payday loan lenders have some of the highest fees and interest charges, but in terms of accessing cash quickly and without hassle, there isn’t a single source that will provide money so quickly.

Getting a Loan
To start shopping from the various payday lenders, you first need to decide what exactly you’re looking for in a loan. This includes:

Credit score – Payday loans from direct lenders may come in two forms: those that are based on your credit score and require a credit check, and those that do not require a credit check. Ordinarily, payday loan companies will lend anywhere from $100-$1,500 to a borrower without a complete credit check, but will not offer very amiable loan terms, and often charge higher than average fees and expenses to cover any potential losses. On the other hand, you may opt for a payday loan from a company that is interested in your credit score, and should you have a credit rating that is better than the average of their typical customer, you’ll likely receive less expensive loan terms. In some, but not all, cases, a credit check may add some time to the application process, so be sure to ask about the option as soon as possible.

Deposit Options – How you access the money you borrow is often as important as the ability to borrow it. Lending institutions that operate in retail banking centers are most likely to be able to provide the loan in cash, or a check, depending on your preference. Payday lenders who work online or over the phone are more likely to opt for marketing methods that require they deposit money directly into your checking account. These direct deposits are often made with an ACH transfer or bank wire, which is why most services suggest that you can have the money in as little as 24 hours.

Shopping Around
Not all lending companies are created equal, and you would be wise to pick a payday lender that competes on price just as much as they compete on service. Traditionally, over-the-phone and online payday loan companies have lower fees, which comes as a result of having lower operating expenditures. However, they don’t provide the same level of service in that it is difficult to find a payday lender online with an offline presence, as well.

Usury limits – Your state likely has guidelines for how much a payday loan company can charge you for a short-term loan. Typically, this amount is set to protect borrowers from signing onto a low-interest loan that looks attractive until the very expensive, non-interest fees are found.

Know the EAR – While most loans are sold with an APR, or annual percentage rate, payday loans are sold with what is known as an EAR, which can be vastly higher than the stated APR. Unlike annual percentage rate, which includes only the amounts that are labeled as interest costs, the EAR, or effective annual rate combines both fees and interest to come up with a complete annual rate of interest.

To explain how this affects your loan, we’ll use the following example:
You want to borrow $1,000 from a payday lender. The lender offers a simple interest rate of 24% per year, or $240 per year in interest. Per month, you would pay $20 to borrow the $1,000 in principle. Additionally, the lender charges $50 per month in fees, which are not assessed as a percentage, but as a flat fee.

The APR for the loan above would be stated as 24%; however, you would pay $600 in fees, or 60% of the loan balance, if you held the loan for a full year. In that year, you would pay $240 in interest plus $600 in fees for a total of $840, or 84% of the amount lent to you.

From this, we can observe that the loan with a stated APR of 24% per year actually works out to a loan with an EAR of 84% per year, nearly four times as much than the advertised APR. When working with a payday lender, always seek information on rates, fees, and interest charges, and always ask not for an APR, but for an EAR, as well. The EAR is exactly how much interest and charges you pay on the loan annually (if you borrow only for one month, then you can divide this amount by 12).

Related Information