Payday loans are short-term loans for small amounts that have high interest rates. They are designed for people who only need a small amount of cash for a short time. It gives people the chance to get cash quickly without having to go through a lot of credit checks. People who can't get credit cards, don't have friends or family who will lend them money, and can't get an advance from their employer often have nowhere to turn when they need a small amount of cash quickly.
Payday loans go by many names, such as cash advance loans, check advance loans, quick cash loans, post-dated check loans, and deferred deposit check loans.
The person who wants to borrow money writes a check to the lender for the amount they want to borrow plus a "loan fee." The lending company then gives the borrower the amount of the check less the "loan fee" in cash. So, if you wanted to borrow $100 for two weeks, you might write a check for $115 and get the $100 in cash.
A Payday loan is one of the most expensive ways to get credit that is legal. (an interest rate between 400 and 700 percent per year), On top of that, if you don't pay back a regular loan on time, you can be hassled about it, but a Pay Day loan company can just deposit the check. When it bounces, you will have broken the law, which the Payday Company can use to force you to pay no matter what. In fact, they can threaten you with criminal charges almost right away, which regular creditors can't do.
Critics say that the loans are unfair and can trap people with low incomes in a life of poverty. But people who support the industry say that the fact that it is so popular shows that payday stores do a good job of helping people get money when banks won't.
Planned legislation would limit borrowers to a maximum of a $600 loan in a 31-day period and let lenders charge service fees of 11–15 percent. The bill would also require payday lenders to get a licence from the state and limit customers to one transaction at a time.
Source: www.loans-money-infoweb.com
