As the name implies, a 3 month payday loan is a loan against your future paycheck (or payday) for the duration of one fiscal quarter.

These loans are popular because they:

  1. Are capped at 3 months. This means the borrower is protected from loans that they might not be able to payback over a longer time duration.
  2. Have a clear payback schedule and timeline.
  3. Are closely aligned with a worker’s future salary if a job is predictable.
  4. Short-term loans (like 3 months) can help pad your credit score and pull you out of the bad credit dog house faster because they provide instant access to capital.
  5. Because of the predictability of the payback period, you can more easily satisfy your debt and build up a succession of on-time payments and profitable loan transactions. If you need money on a short term basis, and can make paybacks on time, a 3 month loan is a valuable form of capital.

3 month payday loans provide 3 perks that conventional payday loans don’t give you. The first value is that to pay off your mortgage, you do not have the deadline of the next payday. On the opposite hand, over a 3 month span, you get one short-term loan to pay back in monthly installments.

The second benefit is the gain of getting low interest rates locked in. There is a rollover option for payday loans, but for that, you have to pay extra. But, you don’t have to pay anything in the term span with such small monthly payment loans.

The third advantage is that without any collateral, you get immediate cash online from direct lenders. Because you spend a fraction of the monthly principal on repayment of the loan, you can save and raise your credit even during the debt cycle.

What is a payday loan?

A payday loan is a really short-term loan that a bank or institution provides to help you get access to  money before your next pay period. The word “payday loan” comes from the strict term limits of the loan. You can only take out a payday loan before your next payday, when you will theoretically have the cash to repay it.

There is no set description of a payday loan; short terms, high payments and extremely high interest rates are applicable on most payday loans. The lawfulness of payday loans varies according to jurisdiction. Under municipal usury rules, fifteen states have prohibitions or restrictions in effect on payday lenders.

A 3 month payday loan is a payday loan with a three-month duration, as the name implies. 

You may or may not be eligible to take out a payday loan for 3 months, depending on where you live and your job. 

Some states have regulations in effect that reduce the length of time you can take out a payday loan.

Your payday lender can agree to rollover your loan in order to get around term restrictions. A rollover of a loan is anytime on the due date you pay only the interest and fees for your debt. The lender encourages you to hold on to your initial principal and to issue a new term and due date for your loan.

When you pay off the initial balance, the loan will resume collecting interest and fees. Depending on your jurisdiction, you may or may not have the option of rolling the loan over. Few states may have restrictions on the amount of ways a payday loan can be rolled over.

Since they do not promise to pay back the whole debt on the due date, many payday loan borrowers wind up rolling their loans over. According to statistics from the Consumer Financial Security Agency, about 80 percent of those who take out a payday loan end up rolling out their loan at least once.

For the borrower, rollovers can make payday loans considerably more costly. Be sure on the due date that you can afford to pay off your balance.