Learning how payday loans work takes the mystery out of the product. You borrow a small amount, agree to repay it plus a fee on your next payday, and the lender typically debits your account or cashes a post-dated check.
Quick answer: A payday loan is a small, short-term loan repaid from your next paycheck. In Washington it is capped at $700 or 30% of gross monthly income, with a 15%/10% fee and a term up to 45 days.
The basic steps
- Apply with ID, income proof, and a bank account.
- Borrow up to $700 (or 30% of gross monthly income) in Washington.
- Agree to a fee of 15% on the first $500 and 10% above.
- Repay in full, usually within 45 days, or request the free installment plan.
What it really costs
Fees look small but annualize to about a 391% APR on a two-week term. Washington’s 8-loan limit and no-cost installment plan exist to keep the product from becoming a cycle. Cheaper options almost always exist first.
Frequently asked questions
In Washington, up to $700 or 30% of gross monthly income, whichever is lower.
By your next payday, up to a 45-day term under Washington law.
Request the no-cost statutory installment plan before the due date.
This article is educational and is not financial or legal advice. Loan laws change; always confirm the current rules and verify that any lender is licensed with the Washington Department of Financial Institutions (DFI) before you borrow.