What Is a Payday Loan?
A Payday Loan is a short-term, high-speed loan designed to cover urgent financial needs until your next paycheck. These loans are typically small in amount and are intended to be repaid within a few days to a month, depending on the lender and salary cycle.
Key Features of Payday Loans
- Fast approval and instant disbursal
- Short-term repayment (usually 7–30 days)
- Minimal documentation required
- No collateral required (mostly unsecured)
- Loan amount depends on income and credit history
Interest Rates 2026
Payday loans often have higher interest rates due to short tenure and instant availability.
| Lender Type |
Interest Rate (p.a.) |
Loan Amount |
Tenure |
| NBFCs / Digital Lenders |
18% – 36% |
₹5,000 – ₹50,000 |
7–30 days |
| Private Banks |
15% – 30% |
₹10,000 – ₹1,00,000 |
15–30 days |
| Salary Advance Providers |
10% – 25% |
₹5,000 – ₹50,000 |
7–30 days |
Eligibility Criteria
- Age between 21–60 years
- Regular salary or income source
- Indian resident
- Bank account in borrower’s name
- Good repayment history preferred
Documents Required
- Identity proof (Aadhaar, PAN, Passport)
- Address proof (Utility bills, Voter ID)
- Salary slip or income proof
- Bank account for loan disbursal
Payday Loan Example
If you borrow ₹20,000 for 15 days at 20% interest per annum:
- Interest: ₹164 approx.
- Total repayment amount: ₹20,164 approx.
- Repayment date: aligned with next salary cycle
Advantages and Disadvantages
Advantages
- Quick access to urgent cash
- No collateral required
- Minimal documentation
- Flexible for short-term emergencies
Disadvantages
- High interest rates for short-term loans
- Overuse can lead to debt cycle
- Limited loan amounts compared to personal loans
How to Choose the Best Payday Loan in 2026
- Compare interest rates and processing fees
- Check repayment tenure and schedule
- Verify lender credibility and transparency
- Borrow only what you can repay on the due date
- Read all terms & conditions carefully
Frequently Asked Questions (FAQs)
How fast is approval?
Most payday loans are approved instantly or within 24 hours.
Is collateral required?
Usually not, these loans are unsecured.
What is the maximum loan amount?
Depends on salary, lender policy, and repayment capacity.
Can I prepay a payday loan?
Yes, but it is usually due on the next salary or within the agreed tenure.
Author: All Finance Store Payday Loan Team
Expertise: Short-Term & Instant Salary Loans
Last Updated: January 2026
Disclaimer: This page is for informational purposes only. Payday loan terms, interest rates, and eligibility vary by lender. Always verify details with official sources before applying.