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If you’re in need of money right away, one option you may be looking into is a payday loan. While these loans are fast and convenient, they come at a cost – steep interest rates that can drive you into a cycle of debt. Here’s what you need to know before you take out a payday loan:

How Payday Loans Work

To obtain a payday loan, you go to the loan company and confirm that you have steady income and a checking account. The lender will then issue you the loan either there at the store or through an electronic transfer to your account. In return, you provide the lender with a check for the amount of the loan, plus any fees, or you authorize the lender to withdraw the money from your account. Either way, the lender obtains the money after your next payday (usually two weeks), hence the name of the loan.

Payday loans are legal in 32 states, and each state puts their own cap on the loan amount. The standard amount is $500, but caps range anywhere from $300 to $1,000.

There’s no credit check involved in the payday loan process, and typically anyone with income and a checking account will be approved. The cost of a payday loan is high, with the standard amount being $15 per $100 borrowed (which is effectively a 391-percent APR), although some lenders charge more or less and each state sets its own limits. If you need to extend the loan, the lender adds a second interest fee.

Repaying a Payday Loan

If you have the money in your account to cover the payday loan, then the loan process is complete once your payment goes through. If not, the lender will continue trying to withdraw the money from your account and may try to withdraw it in smaller amounts. They will also start contacting you and could even contact your personal references.

Lenders might allow you to negotiate a settlement on your loan, or they could sell the debt to a collection agency. Should they sell the debt, the collection agency will report the debt to the credit bureaus, negatively affecting your credit score, and go after you for the money.

Alternatives to Payday Loans

A payday loan is one of the worst loan options on the market and you should avoid them if at all possible. A loan through a bank or credit union is a much better option and will have a far better interest rate, although you’ll also need a better credit score to obtain one.

Ideally, you want to build up an emergency fund so you don’t have to take out a loan when dealing with unexpected financial hardships. Even just saving $100 to $200 per month will give you some cushion should you have an unexpected expense.

Alternatives to Avoid

There are two alternatives to payday loans that have the same drawbacks: payday installment loans and auto title loans.

Payday installment loans work the same as payday loans, except they extend the loan so you pay it back over months or years instead of weeks. You can obtain more money through these types of loans, but the costs are extremely high. On a three-year term, you’ll end up paying several times the original loan amount in interest charges.

Auto title loans involve giving the lender the title to your vehicle in exchange for the loan. The lender bases the loan amount on your vehicle’s current market value, and you get your title back when you pay off the loan. The standard repayment period for these is 30 days, so they’re another short-term loan. They carry similar high interest rates to payday loans, and will leave you without a vehicle should you default.

Payday loans may be one of the easiest ways to get fast money, they’re also one of the most dangerous. Too many consumers end up with more and more debt because they took out a payday loan that they can’t pay back in time. Look for other options if you need money and only consider payday loans as an absolute last resort.