How the Payday Loan Process Works

David Sung | September 13, 2012

Payday loans are supposed to be fast and convenient solutions in a financial crunch and, with one of the fastest approval rates in the country, we’re happy to be there for our customers when they need us. However, there are several steps that are vital in making sure that the loan application process is a successful transaction for everyone involved.


There are many out there just like Penny, who need guidance during the loan application process. It’s important to know exactly what is involved in applying, receiving, and paying back a short term loan. To start off, always research the loan company before walking in to apply. Ask close friends and associates if they have a particular business they can refer you to. Once you have an idea of which loan company to use, take your search online. Customer reviews and business ratings are valuable tools to help you make your final decision. Lastly, visit the company’s site and make sure it’s professional-looking and has loan details, clear forms of contact, and details of the application process. If you notice any typos or grammatical errors, this could be a big red flag for an illegitimate operation.


Once you’ve verified the company and chosen one, you are ready to start the application process. Some personal information will be required. The following list is some of the possible requirements a cash advance store may ask of you:

    • Proof of Income (i.e., recent paystub)
    • Post Dated Check w/Principle and Interest
    • State Issued ID (i.e., Driver’s License)
    • Copy of a Recent Bank Statement
    • Social Security Card
    • Recent Utility Bill
    • References
    • Credit Score or Credit History

You may ask yourself, “Why do I need all of these things?” Each state determines what requirements are needed for cash advances. Make sure you carefully read what you’ll need so you can continue to the next step quickly. It’s also important that all of the information you provide is correct. A payday loan company can check references and call places of employment to verify information if necessary.

You can apply for a loan in one of three ways: online, by phone, or by visiting a location. Applying by one method doesn’t mean you’ll necessarily receive money the same way. Some businesses have chosen to separate application and approval methods.

Approval & Receiving Funds

After your application has been approved, the business will work with you to distribute the funds. If you applied online, you may be required to visit a physical location to finalize the transaction. Visiting a store typically means you can receive the money that day.  Another option is that a company can deposit funds directly into a bank account which can take between 24-48 hours.

A payday loan is a contractual agreement. An employee should go over the contract with you in detail and it should include:

  1. Payment terms
  2. Payment schedule
  3. Fees
  4. Interest rate

If, for whatever reason, you decide to return your loan, most companies will have a grace period of 1-3 days where you can be absolved of the contract without any fees. The full borrowed amount must be returned in order to use this option.

Repaying the Loan

Once the loan term expires, it’s time to begin the repayment phase. Payday loan companies may accept cash at a store location, credit and debit cards, and you can also set up automatic withdrawals from a bank account.

While repaying the full amount is ideal, it is not always possible. If you can’t repay by the deadline, the best thing to do is talk to an employee to discuss the terms of your loan before late fees begin to accrue. Alternative options include refinancing or making smaller installment payments. If you decide to schedule payments, it’s vital that you keep up with them. Missing a payment can lead to serious consequences such as:

  • Transaction fees from the loan company and your bank
  • The loan can be transferred to a collection agency
  • Point deductions on your credit score

Closing the Loan Contract

The loan contract is officially closed when there is no longer a balance on your account. If you provided a check as a part of a loan requirement, it will be returned and your account closed.

We strive to make receiving a loan as efficient as possible. If you ever have questions about cash advance services, it’s best to ask before signing a contract. Our customer service representatives are knowledgeable about all aspects of the loan process and are valuable resources. If you find yourself in a Penny situation, it’s okay to turn to the Cash Store for help.

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Loan Amount is subject to loan approval. Loan terms and availability may vary by location.  Approval rate based on complete applications received across all Cash Store locations. Customers can typically expect to receive loan proceeds in less than 20 minutes; however, processing times may vary. Loans / Advances are provided based on approved credit. Each applicant for credit is evaluated for creditworthiness. Vehicle is subject to evaluation for title/auto equity loans.

Please see the Licenses and Rates page for additional product details.

Cottonwood Financial offers consumer credit products that are generally short-term in nature and not intended for long-term borrowing needs.

In Texas, Cash Store is a Credit Services Organization and Credit Access Business. Loans are provided by a non-affiliated third-party lender. Please see the Licenses and Rates page for links to Consumer Disclosures and choose the one for the product and amount that most closely relates to your loan request.

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