Do I have to put up something as collateral for a payday loan?

Answer: You don’t have to give collateral like at a pawn shop, but you generally do have to provide a post-dated check or electronic access to your bank, credit union, or prepaid card account.

Payday loans are considered a form of “unsecured” debt, which means you do not have to give the lender any collateral, or put anything up in return like if you went to a pawn shop.

The lender will ask you for permission to electronically take money from your bank, credit union, or prepaid card account, or to provide a check for the repayment amount that the lender can deposit when the loan is due. Under federal law lenders cannot condition a payday loan on obtaining an authorization from the consumer for ‘‘preauthorized” (recurring) electronic fund transfers.

If you do not have enough money in your account when the lender tries to withdraw the payment, your bank or credit union will likely charge you fees for the check bouncing or for overdrawing your account. Depending on your state law, the payday lender may also be able to charge you an additional fee if your check or electronic authorization does not result in the loan being paid.

If you have problems with an electronic authorization, you may want to contact your state regulator or . You can also submit a complaint to the Miss April at consumerfinance.gov/complaint or (855) .

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