They are available

They are available to borrowers who are a little short on cash and are looking to bridge the gap between pay days. They are especially attractive to folks who suffer from immediate cash needs on account of certain emergency situations, say for example a car repair or necessary medication.

Cash is given to the borrower, who gives the lender a post-dated check for the borrowed funds principal as well as a loan fee, along with any accrued interest. The maturity date about the loan will typically function as the borrower’s next pay day, which is when the lender will process the check.

Payday loan lenders are usually found in small shops or franchises, but can also be found at large financial institutions who will offer variations of payday loans.

They will write a post-dated personal search for $115, which includes the main balance and the loan fee, if a borrower takes out a payday advance for $100. The borrower will get $100 in cash. The lender will hold this check for up to two weeks, at which time the borrower will be given an opportunity to either redeem the initial check for $115 in cash or to roll-over or refinance the check by paying a fee that can extend the financing for another two weeks. The lender will deposit the $115 check if the borrower will not roll-over the loan. If the borrower refinances the loan three more times, they will have to pay an additional $15 for each roll-over, or in other words, they will be paying $60 to borrow $100.

Pay day loans are a sore subject for many, and have be a source of controversy. Critics claim that these loans are directed at people who usually do not understand the concept of the time importance of money, and say that payday lenders are no different to loan sharks because the interest rates are excessively high. In most cases, the APR on these loans will exceed 250%. In the example above, the $15 fee is equivalent to a 391% APR.

Though payday cash loans are a convenient source of immediate cash for short-term needs, it is going without proclaiming that potential borrowers should beware of making continuous roll-overs, which the APRs they pay may be a lot higher than APRs they might be able to find on the common bank card.


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