Convenient, speedy, and available with bad credit. These are just some of the benefits of getting payday loans, but do these stats give you the whole story? Keep reading to find out more about this kind of small-dollar loan.

1. You Can Find Online Payday Loans

People often lump in payday loan lenders with check-cashing businesses and pawnshops. And it makes sense — all three organizations provide small-dollar, short-term loans with high-interest rates.

However, payday loan lenders are unique in that many of them operate online with no physical branch. Instead of walking through the doors of a brick-and-mortar store, you can fill out an online application for quick cash from your phone or laptop anywhere, anytime you have data.

If approved, your borrowing experience unfolds entirely online, too — from collecting your funds as a direct deposit to arranging an automatic withdrawal to come out of your account.

Check cashers and pawnshops, on the other hand, do all this the old-fashion way: in person.

2. Fewer People Used Payday Loans During the Pandemic

According to the Pew Charitable Trusts, approximately 12 million Americans used at least one payday loan in 2010 — whether from a storefront or online payday lender.

Now more than 10 years and a global pandemic later, you might think these numbers should have multiplied. But early reports suggest fewer people had to rely on payday loans.

The Online Lenders Alliance, an industry association for payday loan lenders, told Bloomberg the demand for small-dollar loans fell by 67% during the lockdown.

Instead of borrowing, many people took advantage of unemployment checks, rent moratoriums, and other COVID relief resources.

3. Most People Use Them Incorrectly

If you take a look at any legit cash advance direct lender’s website, you’ll see they market payday loans as an emergency stopgap when your savings fall short of what you need.

In other words, you should only turn to payday cash advances in unexpected emergencies, like when your furnace dies one winter morning, and you need help covering the repairs.

But what cash advance direct lenders advise and how people borrow don’t always match up. According to the Pew Charitable Trusts, 69% of borrowers use payday loans for expected expenses, like rent, utilities, and groceries.

4. Fees Vs. APR

The reason why cash advance direct lenders say their loans are for emergencies is because of the cost. Let’s face it — payday loans are an expensive way to borrow. But do you know just how expensive?

A cash advance direct lender might charge anywhere between $10 and $30 for every $100 you borrow. This may not sound like too much upfront, but it’s another story when APR enters the mix. Calculated on the annual percentage rate, your APR is anywhere between 300 and 600%.

This APR might be OK depending on your budget, but it may be a challenge for people living paycheck to paycheck.

That’s why a list like this is so important—it gives you the facts you need to make an informed decision about your finances.

What’s your opinion now that you know about triple-digit APRs due back in two weeks?

If this doesn’t sound like a good fit, explore alternatives like lines of credit or installment loans for bad credit. These options give you more time to pay what you owe, so they might be easier to handle on a tight budget.

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