A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash. The lender holds onto the check and cashes it on the agreed upon date, usually the borrower's next payday. These loans are also called cash advance loans or check advance loans.

Although the federal Truth in Lending Act requires payday lenders to disclose their finance charges, these establishments have gotten a bad reputation for their predatory lending practices. Most borrowers using payday loans have bad credit and low incomes. They may not have access to credit cards and are forced to use the service of a payday loan company. Even if the borrower feels the fee may be fair ($17.50 per $100 for seven days), that translates into a rate of more than 900% on an annualized basis. Most loans are for 30 days or less and can be rolled over for additional finance charges. Loan amounts are usually from $100 to $1,500.payday loan, a individual can visit any payday advance lending outlet. They can secure a small advance loan under the agreement that the principle and the interest would be returned in full on their next payday advance. The individual is normally required to write a postdated check covering the outstanding amount.

Payday Loans

Payday Loans
The basic loan in which lender providing a short term unsecured loan repaid at the end of borrowers next payday. This loan is granted on the basis of some verification of income sources through bank account statements

Its short term unsecured loan. Another name is called Cash advances.

Different interest calculation on annual interest percentage rate depending on the method lender used t calculate. Some needy middle class people to go for this short term loan. The lender is having high risk of non repayment of loan by the borrower.