Payday Loans

“I just need enough cash to tide me over until payday.” Sound familiar to you? We are constantly bombarded by ads on the radio, television, the Internet, and even in the mail pitching payday loans. Be aware, however, they come at a very high price are a very expensive source of credit. But despite this, many people still opt for payday loans.

A payday loan, which is a cash advance loan secured by a personal check, have become a way for people to get fast cash. Check cashers, finance companies and others are making small, short-term, high-rate payday loans that go by a variety of names. Sometimes, they’re called cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.

How do payday loans work?
Usually a borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. Afterwards, the company or the lending institution would then give the borrower the amount of money of the check minus the fee. The fees charged for payday loans are usually a percentage of the face value of the check. Sometimes, the fee may be charged per amount borrowed. For instance, for every $100 loan you borrow, you could get charged a fee of $50. If the loan is extended, a process referred to as “roll-over”, you are obliged to pay the additional fees that could incur. So for example, you make an extension of two weeks for your $100 loan. That means, you pay a total of $150 in fees, provided that one week equals to a $50 fee.

Fast Cash, High Rates

To explain just how expensive payday loans can be, let’s say that you need to borrow $100 and so you write a check for $115 which would pay your loan for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, or you redeem the check by paying the $115 in cash. If you can’t make the payment, you can also roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the lender charges you another $15 fee and the loan is costing you 391 percent APR. If you roll-over the loan three times, the finance charge would climb to $60 to borrow $100.

The Paperwork

Under the Truth in Lending Act, the cost of payday loans, like other types of credit, must be disclosed to the borrower. Other pieces of relevant information that you must receive in writing include the finance charge or the dollar amount and the annual percentage rate or APR. The APR refers to the cost of credit on a yearly basis.

More About Payday Loans

Shopping For A Payday Loan
Finding the right payday loan to fit your needs is essential. You don't want to end up paying $50 in loan fees for something you could have gotten for $20 from another lender.

Getting A Cash Advance Loan Online
Getting a cash advance does not take very long at all. Applying for the cash advance loan only takes filling out a simple form and you will soon have the cash in your account for you to use. Paying it back may not be quite as simple.