Payday Loans

Payday loan or paycheck advance is a small, short-term loan that is intended to cover a borrower's urgent expenses until their next payday.

Typical loans are between $100 and $1500, are usually on a 2 week term, and usually have interest rates in the range of 390 percent to 900 percent (annualized).

They are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card.

Some federal banking regulators and legislators seek to restrict or prohibit the loans for all borrowers, because the high costs are viewed as an unnecessary financial drain on the lower and lower-middle class populations who are the primary borrowers.

Lenders point out that these loans are often the only option available to consumers with bad credit who have urgent expenses and cannot get a bank loan, credit card, or other lower-interest alternative.

Critics counter that most borrowers find themselves in a worse position when the loan is due than they were when they took the loan, with many getting trapped in a cycle of debt.

So when considering a payday loan, it is very important to know how much money you have and will have; and how much you are willing to pay for the loan including the interest and principal.

So it is prudent to get hold of an adviser or a mortgage calculator prior to taking a payday loan.