Payday Loans

There are times when you may face a temporary situation where you are short on funds.  A payday loan also called a payday cash advance, a cash advance loan, a check advance loan, a post-dated check loan, or a differed deposit check loan is a small short-term loan designed to provide quick money for those who have an immediate need.  Money is loaned to the borrower with the intention of the total loan amount being paid back in full when the borrower receives his or her paycheck.   

Reasons for considering a payday loan may be valid.  A payday loan may be and option if there is a need to borrow money and you have bad credit.  There may be times when bank charges, over-the-limit fees, late fees, bounced checks or reconnection charges for utility services may cost more than getting a payday loan to pay the bills on time.  You may want to avoid a credit check on your credit report if you are looking to make a major purchase in the near future.  There are also those who would rather get a payday loan than asking a friend or family member to borrow money.  A medical emergency, an emergency car repair, and many other emergency situations may warrant the cause for a payday loan also. 

The Federal Trade Commission warns that this instant cash advance comes with a large price.  Payday loans are one of the most expensive ways to pay back what you borrow.  Since these are designed to be short term loans, payday loan companies charge much more interest and larger fees for their loan service as compared to traditional loans in order to make money.   

Some payday lenders have been know to charge more interest and fees than the law permits.  Carefully evaluate the terms and conditions before you accept a payday loan.  Payday lenders by law must give you the amount of the financial fees and the annual percentage rates in writing.  If you are requesting a payday loan on-line, they should post their disclosures, interest rates and fees before you submit your application. 

Payday loans have raised a lot of questions and concerns.  Legal battles and public views have presented much controversy for the companies that offer these type loans.  Payday lenders have been blamed for taking advantage of people’s financial needs and making much profit from it.  Critics also argue that borrowers may not understand the costs involved in getting a payday loan. 

If you take a payday loan are not able to repay the loan during the allotted time, the balance due increases.  Payday loan companies charge more fees to allow the borrower to extend the loan to another future date.  Some may put up their car or other property to turn the payday loan into a secured loan.  If the loan is not paid back, they lose their car or other property used as collateral. 

As a general rule, getting a payday loan should be your last resort.  If this is your only option, shop around and negotiate with lenders to make sure you are getting the best possible deal to meet your needs.  Only borrow the minimum amount needed and repay the loan as quick as possible.  For more information, please visit

By: Teresa Davis

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