What are 30-day loans?

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A 30-day payday loan is a short-term loan made by a lender to a borrower with a duration of only 30 days (or, generally, one month) – though there may be provisions for shorter terms or extensions of the loan term.

Most often associated with payday or cash advance loans, a 30-day payday loan is typically easier to qualify for, both in terms of income and credit rating, than other types of personal loans. Although payday lenders do conduct employment, income and credit checks, they are often willing to accept borrowers with less-than-perfect credit.

A 30-day payday loan is typically an unsecured one-payment loan. An unsecured loan is a type of financing where no additional collateral is required as a basis for loan approval. This type of loan is in contrast with a secured loan where an asset pledged by the borrower to the lender is a requirement for loan approval. There are also no installment payments. Instead, typical payday loans require one payment for the full balance, usually at the next paycheck.

Other short-term alternatives to these one-month loans are 60-day and 90-day loans.

Elements of a 30-day loan

30-day payday loans are generally smaller in amounts compared with other, longer term loans. Payday loans also require less evaluation than longer term loans by the lender when considering the loan application, resulting in faster approvals and funding. Loan amounts will vary, depending on the lender, from a few hundred to thousands of dollars. The lender will determine the maximum loan amount based on the borrower’s income, and the borrower can accept the maximum or select a lesser amount within the approved range.

This maximum loan amount is relative to the applicant’s monthly income and the lender issues the loan with the expectation of being repaid on or before the 30-day period of the loan. For example, if a borrower’s take home pay on the 30th of the month is $4,000 per month, the lender will verify that income by reviewing a copy of the applicant’s most recent paycheck stub or bank statement from their employer. Both the current as well as year-to-date earnings should appear on the paycheck stub for the lender to review. The lender must make the determination that the borrower will have sufficient income to pay off the 30-day loan when due.

Depending on the lender, payday and cash advance loans will usually require a credit check. However, payday loans normally accept borrowers with less-than-perfect credit. This means those with damaged credit or no credit at all may still qualify for a loan. The applicant may also be required to have a bank account both for the lender to transfer the proceeds of the loan via ACH, as well as to establish an auto-debit payment with the lender at a predetermined date – usually on or just after the applicant’s next pay date.

Because of their usually unsecured nature, payday loans can carry higher interest rates than other loan types. While they are extremely convenient and relatively easier to qualify for, payday loans should be used only in the right situations. As with all credit types, paycheck advance loans should be used responsibly. Yet when properly utilized, a 30-day loan can be a quick way to quickly secure temporary, emergency funds.

Disclaimer: NetCredit is a direct personal loan provider and does not provide financial advice, nor does it vouch for any vendor or service mentioned on our NetCredit personal finance blog or online consumer loan glossary. Always research and perform due diligence on any service provider or vendor before deciding to use them, and we recommend that you speak with a financial advisor regarding all decisions that will affect your finances.

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