Coffee Break Loans: Everything You Need To Know About Small, Short -Term Loans 2023


Coffee Break Loan: Are you strapped for cash and need some fast money to tie you over until your next paycheck? Coffee break loans, also known as payday loans or cash advances, allow you to borrow a small amount of money for a short period to cover unexpected expenses that pop up between pay cycles.

These small, short-term loans are easy to qualify for as long as you have a steady source of income, even if you have bad credit. You simply write a postdated check that the lender agrees to hold until your next payday, usually within two to four weeks, when the full loan amount plus fees are due to be paid back.

In this comprehensive guide, we’ll cover everything you need to know about coffee break loans, including how they work, costs and fees, eligibility requirements, alternatives, and tips for borrowing responsibly so you don’t get caught in a predatory debt cycle.

What Are Coffee Break Loans?

Coffee break loans are a type of short-term, small-dollar credit product that provides a cash advance on your paycheck for a fee. Borrowers write a postdated check for the loan amount plus interest and fees, and the lender agrees to hold the check until the agreed-upon due date, typically your next payday.

Other common names for these loans include:

  • Payday loans
  • Cash advances
  • Deferred deposit loans
  • Check advance loans

Payday lenders offer these loans both through physical storefront locations and online. Loan amounts typically range from $100 to $1,000, depending on state regulations. Terms are usually two to four weeks, coinciding with your next pay date.

When your loan is due, the lender will cash your postdated check or withdraw the funds from your bank account. If you can’t afford to pay back the full balance, some lenders will allow you to extend or “rollover” the loan for an additional fee.

Is Coffee Break Loans Legit:

Yes, Coffee Break Loans is a legitimate lender but their loans can be risky due to the high rates. Consider your options carefully and borrow responsibly if you use them. Checking your state’s regulations on short-term loans is also advisable.

  • Coffee Break Loans is an online lender that offers short-term loans and lines of credit. They are a legitimate company and are registered with the state of California.
  • They offer loans between $250-$5000 with repayment terms from 3-18 months. Interest rates are quite high compared to traditional loans, ranging from 129%-599% APR.
  • To qualify for a loan, you’ll need a checking account, a regular income of at least $1000 per month, and a valid ID. Credit scores may be checked but poor credit is not an automatic disqualification.
  • The application process is quick and loans can be funded as soon as the next business day. However, the high-interest rates can make these loans expensive if not repaid quickly.
  • Coffee Break Loans does appear to be a genuine lender, but like with any short-term lender, borrowers should read the fine print carefully and make sure they can afford the repayment terms before borrowing. Paying back the loan quickly is advisable to avoid excessive interest costs.
  • There are mixed customer reviews online, with some praising the quick funding but others complaining about difficulty canceling loans or high fees. Checking complaint sites for common issues may be helpful before applying.

How Do Coffee Break Loans Work?

Here is a step-by-step overview of how the payday loan process works:

  1. You visit a payday lender in person or online and provide proof of income and a bank account.
  2. The lender reviews your documents and determines how much money you qualify to borrow.
  3. You write a postdated personal check for the loan amount plus a finance charge, usually $15-$30 per $100 borrowed.
  4. The check date coincides with your next payday, usually within 14 days or by your next paycheck.
  5. The lender gives you cash immediately or deposits the funds into your bank account. On the due date, the lender cashes your check or withdraws the repayment amount.
  6. If you can’t repay the loan in full, some states allow the lender to extend or “rollover” the loan for an additional fee. This leads to accumulating fees over time as the balance remains unpaid.

Coffee break loans provide fast cash before payday but charge very high-interest rates. For a $300 loan repaid in 14 days, the fee would typically be around $45, which equates to an APR of nearly 400%. Always read the fine print to understand the true costs.

What Are the Costs and Fees?

Coffee break loans are expensive compared to other credit products. Here are the typical costs:

  • Origination or acquisition fees range from $10-$30 for every $100 borrowed
  • APR (annual percentage rate) averages 400% but can surpass 1,000%
  • Rollover or renewal fees apply if you extend the due date
  • Insufficient fund fees if the lender attempts to cash the check before payday and it bounces
  • Collection fees if you default on repayment

Be sure to read the fee schedule and loan agreement carefully, and borrow only what you can afford to pay back in full when due. Avoid extensions that rack up fees over time.

What Are the Eligibility Requirements?

Coffee break loans have minimal eligibility requirements:

  • Active checking account
  • Proof of income from a job or other regular payments like Social Security
  • Minimum income threshold ranging from $800-$1,000 per month
  • Valid ID and Social Security number
  • Age of 18+ in most states

Your credit score is generally not checked, which opens doors to borrowers with bad credit. Lenders may review your checking account history and overdrafts or bounced checks can disqualify you.

Some states cap the maximum loan amount you can receive your first time borrowing. Income documents may be required, but pay stubs or bank statements showing regular deposits are usually enough.

How to Apply for a Coffee Break Loan

Applying for a coffee break loan is a quick and straightforward process, both online or in person:

  1. Provide your personal and contact information. This includes your name, address, phone number, email, Social Security number, and date of birth.
  2. Share your income source, frequency, and amount. Pay stubs, bank statements, or government benefit letters can document this.
  3. Provide valid ID, like a driver’s license or passport, and your latest checking account and routing numbers.
  4. Review the loan details including amount, fees, rates, and repayment terms before signing.

The lender will review your information and deposit the approved loan amount into your bank account as soon as the next business day. Some may provide cash immediately if applying in person.

Alternatives to Avoid Debt Cycles

While coffee break loans provide quick access to cash, the high costs and short repayment terms can trap borrowers in cycles of debt. Consider these lower-cost alternatives first:

  • Ask your employer for an advance on your paycheck
  • Use a credit card or borrow against a credit line
  • Take out a small personal loan from a credit union or peer-to-peer lender
  • Ask to delay bill due dates until you get paid
  • Seek assistance from charitable organizations or nonprofits
  • Borrow from family or friends and repay when possible

Building an emergency fund equal to 3-6 months of expenses can help handle surprise costs without needing costly loans. Also, try cutting expenses or boosting income to free up more cash flow.

Tips for Responsible Borrowing

If you do take out a coffee break loan, follow these tips to avoid common pitfalls:

  • Borrow only the amount you need to avoid excessive fees
  • Have a solid plan to repay in full on time before borrowing
  • Avoid rolling over or extending the loan, which leads to spiraling fees
  • Read the fine print and make sure you understand the full costs
  • Don’t borrow more than you can afford to repay from your next check
  • Have funds on hand to cover living expenses until your due date
  • Track the due date and make repayment arrangements in advance
  • Reach out to the lender immediately if you foresee issues repaying on time

The Bottom Line

Coffee break loans provide emergency cash flow between paychecks. Just be sure to borrow minimally, repay on time, and have a plan to avoid relying on them long-term. Their ultra-high fees make these good options only for one-time, critical expenses when no lower-cost alternatives exist. With responsible use, they can serve as a financial bridge to your next paycheck.

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