If you're like many Americans, you occasionally find yourself in need of some quick cash to buy groceries or fill up your car before the next payday. In fact, more than 12 million Americans take advantage of paycheck advance loans or "payday loans" each year. However, the federal Consumer Financial Protection Bureau (CFPB), a federal watchdog group, has recently cracked down on payday lenders by implementing a number of regulations, changing the interest rates, repayment periods, and other loan terms of paycheck advance loans. Are these types of fast cash loans still a good option if you're in a cash crunch? Read on to learn more about your short-term lending options in a climate where many types of installment loans are slowly being phased out. 

What changes did the CFPB make to the way payday lenders operate?

Prior to the formation of the CPFB and promulgation of specific regulations, most payday lenders were governed only by state laws -- often resulting in dramatic variances in the interest rates charged to borrowers from state to state. With the advent of online lending platforms, these differences became even more stark -- those living in states deemed "unfriendly" to payday lenders needed only to log onto a lending site headquartered in another state to have funds wired or electronically transferred to a bank account. 

In an attempt to curb payday lending abuse and standardize lending practices nationwide, the CFPB issued a number of proposed regulations designed to make payday loans safer and more affordable for consumers and lenders alike. Many states have already begun turning these regulations into law, passing bills that cap the interest rates payday lenders can charge or restrict borrowers from taking out more than a single loan at once. 

Some of the biggest changes propounded by the CFPB include: 

  • Elimination of "debt trap" loans by requiring the lender to make some preliminary inquiries into the borrower's ability to repay; 
  • Preventing a borrower from taking out another payday loan within 60 days of the initial loan except in specified circumstances (and after again demonstrating the ability to repay the loan);
  • Prohibiting borrowers from "rolling over" a loan or extending the term (and therefore, interest rate) on an original payday loan; and
  • Capping the maximum loan amount at $500. 

What are your current quick cash options? 

While these regulations can seem onerous, they are meant to diminish the probability that you'll find yourself trapped in a debt cycle -- unable to repay your initial payday loan and taking out additional loans just to cover interest charges. As a result, borrowing money from a payday lender in your state may be cheaper now than ever before. 

Your first step when evaluating your options should be to run an online search of local lenders. By finding a list of (and contact information for) lenders in your area, you'll be able to compare interest rates and other loan terms to determine which is the best option for you. For example, if you know you'll be receiving a windfall (whether an income tax refund, inheritance, or gift) within the next few weeks, you may want to ensure that your loan term extends beyond this date to give you some extra breathing room and prevent you from having to renew or roll over your loan. 

If your area has few (or no) brick-and-mortar payday lending companies, an online lender may be an option. By inputting some of your personal information (including Social Security number, driver's license number, and bank account information) into an online form, you can receive near-instant approval and have the funds transferred to your bank account within just a few minutes -- helping prevent expensive overdraft fees or late charges.