ACH Payday Loans — What Are They?

Advances in technology have made it easier than ever to get money deposited into your account.  One huge innovation has been the use of the ACH network to deposit payday loans into borrower's bank accounts.  By using the speed and efficiency of the ACH networks, payday lenders are able to deposit payday loans into borrower's accounts within one business day of approving the customer for a loan.   A customer who borrows $300 can get the money deposited into her account the next business day thanks to the ACH network.

Further, when the customer's loan is due to be repaid, the lender can automatically debit the customer's bank account for the amount due.

The use of ACH networks to debit and credit customer's accounts is most commonly used by so-called "faxless payday loan" companies.  Many of the lenders that work with NextDayCheck.com are faxless payday lenders.

If you are curious about how the ACH networks operate, the best source of information is provided by NACHA, the association that governs many ACH transactions in the United States.   They have created an information site for consumers so that you can better understand how these transactions work.  The site is ElectronicPayments.org.

As a payday loan borrower, here's an important tip.  Make sure to review your loan agreements carefully.  One of the documents a lender may ask you to sign is an ACH debit authorization form.  Make sure that the form is clear, has the correct due date for your loan (probably your next paydate), and accurately refers to your bank account.

If you authorize a lender to debit your account via ACH, make sure you have enough money in your account BEFORE the date the lender will debit your account, or you will "bounce" your payment and be hit with one or more insufficient funds charges (which can make a payday loan even more expensive than it already is).

Bouncing an ACH debit is just as bad as bouncing a check.  If you have a history of bouncing checks (or ACH payments), you run the risk of having your bank account closed (and you may have difficulties opening a new account if you end up on the ChexSystems list of people who are considered to be banking risks).

Enjoy the benefits of using the ACH system.  You will get your loan money more quickly.

But also use caution — make sure you carefully read your loan agreement forms and understand exactly when your account will get debited to repay your loan.