Payday loans in Alabama are short-term financial products designed for urgent needs. However, they come with significant costs and potential risks that borrowers should carefully consider.
While these payday loans in Alabama are legal, and can provide quick access to cash, their high costs and short repayment terms make them a financial option that should be approached with caution.
Best Payday Loans in Alabama
- LoansUnder36 – Best Payday Loan Alternative
- Advance America – Best for Widespread Locations
- Speedy Cash – Best for Online and In-Store Options
- ACE Cash Express – Best for Quick Application Process
- Low Credit Finance – Best Alternative For Bar Credit
Online Payday Loans in Alabama
The reality is that all payday lenders in Alabama will charge you similar high fees to borrow money. They’re all trying to maximize their profits up to the state’s legal limits.
Because of this, choosing between different payday lenders often doesn’t result in significant savings – you’ll likely end up paying high fees regardless of which lender you choose.
Given this situation, how should you proceed if you need a short-term loan in Alabama?
Why We Don’t Recommend Payday Lenders in Alabama
While payday loans might seem like a quick solution to financial emergencies, they come with significant drawbacks:
- Extremely high interest rates: Annual Percentage Rates (APRs) for payday loans in Alabama can reach up to 638%.
- Short repayment terms: Typically, you only have until your next payday to repay the loan in full.
- Potential debt cycle: Many borrowers struggle to repay on time, leading to rollovers and additional fees.
- Limited regulation: While Alabama has some regulations on payday lending, they still allow for very high-cost loans.
A Better Alternative: LoansUnder36
Chosen 6,414 times- Loans with APRs under 36%
- Loans from $500 to $35,000
- Fast and easy approval process
- No minimum credit score requirement to apply
Instead of recommending a direct payday lender, we suggest considering LoansUnder36 as a more affordable and flexible option.
Why LoansUnder36 Deserves Your Attention
LoansUnder36 is not a direct lender but a marketplace that connects borrowers with multiple lenders offering personal loans. Here’s why they might be a better fit for Alabama residents:
Lower Interest Rates: As the name suggests, all loans have APRs under 36% – significantly lower than payday loans.
Larger Loan Amounts: You can borrow between $500 and $35,000, depending on your qualifications.
Longer Repayment Terms: Instead of just a few weeks, you get 6 to 72 months to repay, making monthly payments more manageable.
Soft Credit Pull: They use a soft credit check that won’t impact your credit score to show you potential offers.
Multiple Lender Comparison: You can compare offers from various lenders in one place, potentially saving you time and money.
Advantages
You Might Benefit from LoansUnder36 If:
- You’re looking for more than $500 (Alabama’s typical payday loan limit)
- You need more than a few weeks to repay your loan
- You have fair to good credit and can qualify for better rates
- You want to avoid the extremely high costs associated with payday loans
Remember, while LoansUnder36 offers more attractive terms than payday loans, it’s still a loan that needs to be repaid. Before applying, consider all your alternatives.
How Much Do Alabama Payday Loans Cost?
Alabama payday loans come with extremely high costs that can trap borrowers in a cycle of debt. As we discussed earlier, all payday lenders in the state charge the maximum allowable fee.
To illustrate just how expensive these loans are, let’s break down the costs based on different loan terms:
| Loan Term | Fee Rate | APR | Fee on $500 Loan | Total Repayment on $500 Loan |
|---|---|---|---|---|
| 10 days | 17.50% | 638.75% | $87.50 | $587.50 |
| 14 days | 17.50% | 456.25% | $87.50 | $587.50 |
| 31 days | 17.50% | 206.05% | $87.50 | $587.50 |
Key Takeaways:
- Consistent Fee Rate: Regardless of the loan term, Alabama payday lenders charge a flat 17.50% fee on the loan amount.
- High APRs: Even the lowest APR (206.05% for a 31-day term) is significantly higher than most other forms of credit.
- Short Terms Inflate Costs: The shorter the loan term, the higher the effective APR, with 10-day loans reaching an astronomical 638.75% APR.
- No Cost Savings for Larger Loans: The fee rate remains constant regardless of the loan amount, offering no economy of scale for larger loans.
Comparing Payday Loans to Alternative Borrowing Options
To truly understand the cost of Alabama payday loans, it’s helpful to compare them with other short-term borrowing options.
Let’s look at how a $500 payday loan compares to alternatives such as installment loans, pawnshop loans, and cash advance app loans.
Comparison for a $500 Loan:
| Loan Type | Typical APR Range | Repayment Term | Estimated Total Repayment |
|---|---|---|---|
| Payday Loan (Alabama) | 206.05% – 638.75% | 10-31 days | $587.50 |
| Installment Loan | 36% – 100% | 3 months | $537.50 – $625.00 |
| Pawnshop Loan | 12% – 240% | 30 days (renewable) | $520.00 – $600.00 |
| Cash Advance App | 0% – 36% | Until next paycheck | $500.00 – $515.00 |
How do I Apply for a Payday Loans in Alabama?
Proof of Identity: A valid, government-issued photo ID (driver’s license, state ID, or passport). Must be at least 18 years old.
Proof of Income: Recent pay stubs (usually from the last 30 days). For self-employed: tax returns or 1099 forms may be required.
Active Bank Account: Checking account details (account number and routing number). The account should be in your name.
Contact Information: Current phone number, valid email address, and physical address (P.O. boxes are typically not accepted).
Social Security Number: For identity verification purposes.
What You’ll Need:
Choose your lender
We recommend LoansUnder36 which has the potential to save you hundreds compared to a payday loan. To apply::
- Click here to begin their application process
- Follow the prompts to complete your application
Alternatively, if you do want a payday loan, one of the lenders we mentioned earlier (such as Advance America, ACE Cash Express, or Speedy Cash) may have a physical location near you, and can always apply in person. This option also typically offers same-day funding. In-store applications can be convenient if you:
- Prefer face-to-face interactions
- Have questions you’d like answered in person
- Want to receive your funds immediately in cash
Complete the Application
- Online: Usually takes 10-15 minutes
- In–person: Might take 30 minutes to an hour
Be honest and accurate. Lenders cross-check information, and discrepancies can lead to automatic rejection.
Review the loan agreement
This is crucial! Don’t skip the fine print. Heres what to look for:
- Fee structure: Should not exceed 17.50% of the check’s face value
- Repayment date: Mark this on your calendar immediately
If anything is unclear, ask questions. Reputable lenders should be willing to explain every detail.
Wait for approval
- Online: Often instant or within a few hours
- In-person: Usually on the spot
- What affects approval?: Income, existing debts, past payday loan history
A quick approval doesn’t mean this is a good financial move. Take a moment to reconsider if this is truly your best option.
Get your cash
- Online with Advance America: Same-day ACH transfer possible if approved early
- In-store: Immediate cash or check
Faster funding might come with additional fees. Always ask if there’s a charge for expedited transfer.
Preparing for Repayment
- Due date: Typically your next payday, maximum 31 days in Alabama
- Repayment methods: Automatic withdrawal (most common), In-person cash payment, or Online transfer.
Set up alerts several days before the due date. Ensure your account has sufficient funds to avoid overdraft fees on top of loan fees.
Are there Alternatives?
While payday loans might seem like a quick and easy solution, they often come with extremely high interest rates and fees that can trap borrowers in a cycle of debt.
It’s crucial to understand that there are usually better alternatives available, even if you have less-than-perfect credit or need money quickly.
Here are several alternatives to consider, each with its own advantages:
6 Smart Payday Loan Alternatives:
- Paycheck Advance Apps: Provide access to a portion of your earned wages before payday. Often charge minimal fees or operate on a tip-based model. Examples include Earnin, Dave, and Brigit
- Credit card cash advances: Usually have lower APRs than payday loans, though higher than regular purchases.
- Negotiate with creditors: Many offer hardship programs or payment plans, which can help avoid late fees and negative credit reporting.
- Local charities or government assistance: Programs like Alabama 211 or the Alabama Department of Human Resources offer various forms of financial aid.
- Employer paycheck advances: Some employers offer low or no-cost advances, typically repaid through payroll deductions.
- Pawnshop Loans: Use valuables as collateral for a short-term loan with lower rates than payday lenders.
Risks and Considerations
We’ve said it over and over throughout this article. Payday loans can be very dangerous. Here’s a closer look why:
The Debt Cycle
One of the most significant risks associated with payday loans is the potential to fall into a cycle of debt. Although Alabama prohibits rollovers, borrowers might be tempted to take out new loans to cover old ones, leading to a cycle of increasing debt.
Breaking the Cycle
- Seek Financial Counseling: Organizations like the National Foundation for Credit Counseling can provide guidance on managing debt and breaking the payday loan cycle.
- Consider Debt Consolidation: A debt consolidation loan could help you pay off payday loans and other debts with a single, lower-interest loan.
How to save $619.00 on your loan
The price difference for a $500.00 loan in 90 days is $619.00.
Alabama Borrowers’ Legal Protections and Resources
Alabama has implemented several laws and regulations to protect consumers who use payday loan services. These protections are designed to prevent predatory lending practices and ensure fair treatment of borrowers.
Here are some key protections and regulations you should be aware of:
- Maximum loan amount: Alabama law caps payday loans at $500.
- Loan term limits: Loans must be between 10 and 31 days.
- Fee restrictions: Lenders can charge no more than $17.50 per $100 borrowed.
- No criminal action: Lenders cannot pursue criminal charges for failure to repay.
- Cooling-off period: There’s a one-day cooling-off period between loans.
- Database check: Lenders must check the state database to ensure borrowers don’t have outstanding payday loans exceeding $500.
Resources for Alabama Borrowers:
- Alabama State Banking Department: Regulates payday lenders and handles complaints. Website: www.banking.alabama.gov Phone: (334) 242-3452
- Alabama Attorney General’s Office: Provides consumer protection services. Website: www.alabamaag.gov Consumer Protection Hotline: (800) 392-5658
- Credit Counseling Services: For free or low-cost financial advice. National Foundation for Credit Counseling: www.nfcc.org
- Alabama 211: Connects residents with local resources for financial assistance. Dial 211 or visit www.211connectsalabama.org
FAQs about Online Payday Loans in Alabama
Can I get an online payday loan with bad credit in Alabama?
Yes, many lenders offer loans regardless of credit score, but fees will be high.
How quickly can I receive funds?
Most lenders provide funds within 24 hours, some offer same-day funding.
Are there restrictions on loan use?
No specific restrictions, but use responsibly for urgent, short-term needs only.
Can I have multiple payday loans at once?
You can have multiple loans, but the total amount borrowed cannot exceed $500.
What happens if I can’t repay on time?
You may face additional fees and potential legal action. Lenders cannot pursue criminal charges.
What documents do I need to apply?
Typically, you’ll need a valid ID, proof of income, and bank account details.
How do payday loans affect my credit score?
Most payday lenders don’t report to credit bureaus, but defaulting can impact your score if sent to collections.
