Payday loans are sold as fast and simple, and mechanically they are. The details still decide whether one helps or hurts. This guide explains how payday loans work in Fresno, step by step, using the California rules that apply to every Fresno borrower. It also shows what a loan really costs and what cheaper choices you have.
Quick answer: A California payday loan lets you receive up to $255 in cash by writing a check for up to $300 that the lender holds for up to 31 days. The fee is up to 15% of the check, so $45 on $300, and the full amount comes due in one payment. In Fresno, a credit union loan, a utility payment plan or local assistance often costs far less.
The basic idea
A payday loan is a small, short-term loan meant to cover a gap until your next paycheck. In California it is legally called a deferred deposit transaction. You write the lender a check for the full amount you will owe, and the lender holds it until the due date. In return you get cash now, minus the lender’s fee.
On the due date, the lender deposits the check. That one payment covers the cash you received plus the fee. There are no monthly installments. Everything is due at once.
The California limits at a glance
California sets firm limits on payday loans, and they apply whether you borrow at a Fresno storefront or online.
- The check can be for no more than $300.
- The term can be up to 31 days.
- The fee can be up to 15% of the check, which is $45 on a $300 check.
- Because the check includes the fee, the most cash you can receive is $255.
If a lender offers larger amounts or monthly payments, it is a different kind of loan with different rules. Ask which license it operates under.
Applying and what lenders look at
Payday lenders keep requirements light. Expect to show proof of income such as pay stubs or bank statements, an active checking account, a valid ID and often a Social Security number. Many focus on your income and bank account instead of a full credit report, though practices vary, so ask what the lender checks.
Easy approval is not the same as an affordable loan. A lender confirming that you have a paycheck does not tell you whether you can spare $300 on payday and still pay rent and groceries. For more on this step, see what lenders check before approving you.
Getting the money
Funds arrive as cash at a storefront or by direct deposit online, sometimes by the next business day. Federal Truth in Lending rules require the lender to show the finance charge and the annual percentage rate in writing before you sign. California also requires the agreement to be in the language mainly used to negotiate it. If you negotiated mainly in Spanish, Chinese, Tagalog, Vietnamese or Korean, you are entitled to a translation.
Do not assume you can undo the loan after you sign. Decide before you put pen to paper.
A worked example with the full cost
Say you need $255 for a car repair. You write a check for $300. The lender hands you $255 and keeps the $45 fee. Two weeks later, your $300 check is deposited.
- Cash you received: $255
- Fee: $45
- Total you repay: $300
- Cost to borrow $255 for 14 days: $45, or about 17.6% of the cash
That works out to an APR of about 460%. It looks huge because the loan is so short. Over the full 31 days, the same $45 is roughly 208% APR. To see why the fee and the APR tell different stories, read APR vs. interest rate.
The danger is repeating. Borrowing three times in a row means $135 in fees to receive $765 in cash, and you still owe $300 at the end.
One loan at a time
A lender may have only one payday loan open with you at a time, and it may not make you a new loan to pay off an existing one. You can read more in California’s rule against extending payday loans. These rules help, but they do not stop every cycle, because a short borrower can still turn to a different lender. If you are planning a second loan to cover the first, stop and look at the options below.
Repaying, and what if you cannot
Repayment is a single lump sum on the due date, within 31 days. If you repay on time, the $45 fee is the entire cost. Check your bank balance a day or two ahead, because a bounced check can also bring a bank overdraft fee.
If the check bounces, the lender may charge one $15 returned-check fee, and that is the only charge allowed for a bounced check. The debt remains. Some things the lender cannot do:
- Take collateral such as your car for the loan.
- Pursue criminal charges or criminal process against you.
- Charge an extra fee if it agrees to an extension or payment plan.
Lenders are not required to offer a plan, but you can ask, and any agreement should be in writing. Collectors must follow the Rosenthal Act and be licensed by the DFPI. Your rights are covered in your rights as a payday borrower in California.
The paperwork to read before you sign
- The check is $300 or less, and the cash you receive matches the amount shown.
- The fee is no more than 15% of the check.
- The due date gives you a realistic chance of paying in full.
- The APR and finance charge are shown.
- Any extra “processing” or “service” charge is explained. If it is not clear, ask what law allows it, or walk away.
Keep a signed copy of everything.
When a payday loan makes sense, and when it does not
A payday loan fits one narrow situation: a small, one-time gap that you are certain you can close with your next paycheck. It fits poorly when the need is large, comes up again and again, or depends on income that may change, as it often does for seasonal workers. A simple test is to ask, “If I hand over $300 on the due date, can I still cover the next two weeks?” If not, the loan delays the problem and adds $45.
Cheaper options to try first
- Credit union loans. EECU is the largest credit union based in the central San Joaquin Valley. Membership is open to school employees, students and retirees in its 12-county area, some local employers, and family or household members of members. Confirm eligibility with the credit union. Federal credit unions also offer payday alternative loans, which charge at most 28% interest plus an application fee of no more than $20. See credit unions vs. payday lenders in Fresno.
- Payment plans. Ask PG&E, the City of Fresno utilities office or your landlord for more time before you borrow.
- Employer pay advances. Some employers allow an advance on earned wages for little or no cost.
Where to get help in Fresno
If a bill is why you are thinking about a loan, a phone call may fix it. PG&E at 1-800-743-5000 can discuss a payment arrangement, the CARE and FERA discounts and Budget Billing. The City of Fresno Utilities Billing and Collection office, (559) 621-6888, can discuss arrangements for water, sewer and trash. For help finding other services, dial 211, run by United Way Fresno and Madera Counties, 24/7 and multilingual. If you are in trouble with a loan or a collector, Central California Legal Services offers free legal help at (559) 570-1200.
Check the lender before you borrow
Search for a license at dfpi.ca.gov or call the DFPI consumer line at 1-866-275-2677. Our guide on how to verify a licensed lender with the California DFPI walks through the steps.
Frequently asked questions
The check can be up to $300. After the fee of up to $45, the most cash you can receive is $255. Your income or credit does not raise that limit.
The fee can be up to 15% of the check. On a $300 check, that is $45, and you receive $255. Over a 14-day term, the APR is about 460%.
Practices vary. Many focus on proof of income, an active bank account and ID rather than a full credit report. Ask the lender what it checks.
You repay in one lump sum on the due date, which can be up to 31 days after the loan. It is often set for your next payday.
No. A lender may have only one open payday loan with you at a time, and it may not make a new loan to pay off an existing one.
The lender may charge one $15 returned-check fee if the check bounces. You can ask for an extension or payment plan, and if the lender agrees it cannot charge an added fee. Get the terms in writing.
No. California law does not allow criminal charges or criminal process against a borrower over a payday loan. The lender may still try to collect the debt through allowed means.
You can file with the DFPI online at dfpi.ca.gov or by calling 1-866-275-2677. See how to file a complaint against a California lender.
This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the California Department of Financial Protection and Innovation (DFPI), and read the fee disclosure in full.