How to Compare

What is a Payday Loan?

A payday loan (also known as a cash advance) is a small-principal, short-term loan that is usually repaid on the borrower’s next payday. Online payday loans are accessible over the web, are often approved instantly and are deposited directly into the borrower’s bank account.

Payday loans are a convenient source of credit for consumers with less-than-perfect credit history or who have had trouble qualifying for credit in the past. To receive online cash advances, you must have a steady source of income, be 18 years of age or older and have a valid checking account, among other requirements.

What Makes Payday Lenders Different?

Online payday loan lenders might all seem the same, but they’re not. Our payday loan comparison rates the top online lenders based several very distinct attributes. Learn more about these important attributes and how they might affect your decision:

State-by-State Licensing: Online lenders often operate under different licensing policies. These policies can vary in terms of legitimacy and the extent of consumer protection.

  • State-by-State licensed lenders apply for individual state licenses and are approved to lend in every state they do business. This licensing provides you the most protection because it requires the lender to follow the rules and regulations set forth by your state legislature.
  • Single-state licensed lenders operate under a single state’s licensing and apply those rules to borrowers in other states. This form of licensing provides you less protection because the rules they follow may not be the same as those set forth by your state legislature.
  • Tribal lenders operate under special Tribal licensing agreements. Similar to single-state licensing, some will offer loans outside of their jurisdiction via the internet and do not necessarily follow the rules of your state.
  • Offshore lenders often do not follow any form of licensing, are not approved for lending in most, if not all, U.S. states and operate illegally by providing loans to consumers over the internet from remote locations. These lenders should be avoided because you have no protection against illegitimate lending practices since they operate outside of U.S. jurisdiction.

Site Security: Online payday loan applications require you to provide basic private information. In order to trust an online lender, you should know that they employ the latest online security features, which may include one or more of the following:

  • McAfee: protects your computer from online viruses
  • VeriSign: ensures the secure transmission of your personal information on the web
  • Thawte: ensures the website you are using is secure
  • GoDaddy Secured Site: protected to GoDaddy security standards

Affiliations: A good sign of a trustworthy lender is whether they follow the best practices of industry trade groups, which promote fair and honest lending practices. Some major consumer protection groups include:

Loan Amount: The amount of money a lender will be able to fund based on qualifying information such as income and state of residence.

Loan Fee: The fee (usually represented as a dollar amount per $100 funded) that a lender will charge you for using their lending service. State licensed lenders will never charge you more than the rate caps set forth by your state legislature.

Next Day Funding: Whether or not a lender can deposit your funds by the next business day after you apply and are approved.

Direct Deposit: Whether or not a lender can deposit your loan funds directly into your bank account.

Right to Cancel: Whether or not a lender will allow you to cancel your loan at no cost within a set period of time, should you decide you no longer need or want the loan.

Preferred Member Program: Some lenders provide special discounts to repeat customers that make timely repayments and use the service responsibly.

Referral Program: Some lenders provide discounts or rebates to customers that successfully refer new borrowers to their services.

24/7 Customer Support: Whether or not a lender provides around-the-clock customer service to their customers.

Online Chat: Whether or not a lender allows you to talk directly to customer service representatives through an online chat feature, similar to instant messaging, hosted on their website.

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Data based on research performed 4/1/2010. Copyright © 2011ThePaydayComparison.com