How does a direct deposit payday loan work?
Online payday loan providers rely on the ACH system to disburse funds as well as collect repayments. When you’re getting a direct deposit payday loan you’ll have to provide your bank routing number and your bank account number, and the lender will use these details to transfer the money into your account.
The lender relies on the same information when your repayment is due, simply requesting the funds from the nominated bank account on the due date. This system offers convenience to both borrowers and lenders.
Features of direct deposit payday loans
Not all payday loans are the same. These are the features you should look for when comparing your options:
- How long it takes to receive your loan. After it’s initiated, a direct deposit takes hardly any time to go through, so what makes a difference is how quickly a lender processes your application. Payday lenders do not take the same amount of time to process applications, and many don’t work outside of business hours or weekends.
- Variable loan amount. You can borrow various amounts depending on your state laws as well as your requirements, but payday loans typically come with low minimum amounts. This can work well because when you borrow more than you need, you end up paying more interest.
- Fees. While state regulations oversee the administration of payday loans in most American states, you still have to pay attention to the fees payable over the course of the loan term. Bear in mind that these fees can vary considerably from one lender to the next.
- Store locations. This is not so much of a concern if you’re applying online as well as wanting to receive your loan and make repayments via direct deposit. If you want to deal with your payday lender in person, its network of store locations will be a relevant factor.
- Multiple options. There are lots of payday lenders who offer direct deposit payday loans. People who don’t want to carry out extensive research on their own have the option of turning to loan matching agencies to apply.
- Apply from anywhere. As long as you can provide the required information, all you need is access to the Internet to apply for a direct deposit payday loan.
- Freedom in spending money. You can spend the funds you receive from a payday loan for just about any legitimate purpose. You can use this money to pay bills, travel, or to simply get by until your next payday.
- Need a bank account. You don’t just need a bank account – you need a bank account that is authorised to receive direct deposits. Your lender relies on this account to send you your loan as well as to collect your repayments.
- High fees. Payday loans tend to charge higher fees when compared to other loans, both in upfront and ongoing costs.
Is there anything you should avoid?
Avoid getting a payday loan if you feel you might not be able to repay it on time. Repaying a payday loan after its due date could see you paying late fees and NSF fees, and if you choose to accept a rollover, you’ll have to pay additional fees. The may have a negative effect on your credit score.
Before you accept the loan, take time to go through its terms and conditions carefully. This should give you a clear picture of the fees and charges you might have to pay under various circumstances.
Frequently asked questions about direct deposit payday loans
How quickly can I get access to funds through a direct deposit payday loan?
Upon approval, some payday lenders deposit approved funds into your bank account within minutes. Just how quickly you can access these funds depends on your banking institution as well as the lender.
Can I apply for a direct deposit payday loan if I have poor credit history?
Yes. Most payday lenders don’t require borrowers to have good credit history, as long as they can demonstrate their ability to repay.
What eligibility criteria do I have to meet to apply?
You should be an American citizen or American resident, you should meet your state’s minimum age requirement, you should have an ability to repay the borrowed sum, and you should have a direct deposit enabled bank account.
Direct deposit payday loans give you the ability to apply from just about anywhere, and you can also access approved funds no matter where you are, as long as there’s an ATM around. Given the number of alternatives on offer, comparing your options before applying is a good idea.
Rob Fleming is a Canadian politician who represents the riding of Victoria-Swan Lake in the Legislative Assembly of British Columbia. Fleming was elected the British Columbia New Democratic Party Member of the Legislative Assembly (MLA) for the district of Victoria-Hillside in the 2005 British Columbia general election, defeating incumbent...
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