What should you know about payday loans?

A payday loan (also called a payday advance, salary loan, payroll loan, small-dollar loan, short-term, or cash advance loan) is a small, short-term unsecured loan, “regardless of whether repayment of loans is linked to a borrower’s payday.” The loans are also sometimes referred to as “Check loans”, “deferred deposit loans”, or “cash advances”.

Payday loans are available from a storefront and online lenders. The interest rates and terms of these loans vary depending on the lender and state regulations. These loans are meant to be short-term solutions to financial emergencies.

Borrowers should carefully consider their options before taking out a payday loan. Borrowers should shop around for the best interest rate and terms before applying for a payday loan.

What are payday loans for?

In a nutshell, payday loans are short-term loans that borrowers can use to cover emergency expenses. They’re typically due on the borrower’s next payday, which is why they’re also known as payday advances.

Payday lenders often advertise their products as a way to bridge a cash flow shortfall between paychecks or to cover unexpected expenses. And while that may be true for some borrowers, payday loans can also be expensive and risky. READ MORE HERE