A payday loan or cash advance is a small, short-term financial instrument that allows a borrower to cover expenses until the next salary. Generally, the amounts of these loans range from $ 100 to $ 1500, a period of 10-14 days are quite high and the interest rate (APR) of 390 to 900 percent.

Payday loans are regulated at the state level - each state has its own laws on Payday Loans. Meanwhile, the U.S. Congress passed a law in October 2006 that limits the loan of military personnel at 36% APR. The Department of Defense is concerned that donors Payday May cause financial hardship for soldiers and even compromise safety.

Some federal banking regulators are trying to limit or prohibit not only payday loans for military personnel, but for all customers. The high interest rates are considered a financial blow to the lower middle class and those who are the main beneficiaries of this credit.

The payday lenders that the loans are often the only way to have money available for customers with bad credit history or can not get another, less attractive alternatives, such as a bank loan or a credit card . In turn, critics say that the majority of borrowers are in a worse financial situation when they have to repay their loans. Many are trapped in a cycle of unsecured debt.

The statistics compiled by the Center for Responsible Lending show that the majority of payday lending profit comes from repeat customers who can not repay the loans before the due date and extend their loans, pay each time.

Retail lending.

Payday loans to a store and a small cash advance of about $ 100 to $ 500 by paying the borrower's next.

As the cost of loan, the customer must pay from $ 15 to $ 30 $ 100 borrowed for 14 days, resulting in interest rates of 390 to 780 percent (APR). On the due date the borrower returns to Payday loan store and wrote a check to your lender the total amount of the cash advance and charge.

If the borrower does not repay the loan, the lender to verify the process in May traditionally or through electronic withdrawal from the bank account of the borrower.

If there is not enough money to cover the check on the current account, the customer will face additional costs from its bank, plus the cost of borrowing. Meanwhile, most payday lenders offer a wide payment plan, without additional cost to customers who can not pay their loans on the date of expiry.

In many states, like Washington, extended payment plans are required by State law.

Internet ready.

You can get a payday loan Payday loan to be stored, but special loans through websites online. Typically, a customer filling out a simple online application form, in which he or she is needed and personal income, social security number and employer information. Some lenders require fax copies of a check, a recent bank statement, and signed the documents. Immediately after the approval of the loan amount is deposited directly into the bank account of the borrower. The loan on the due date for payment of the tax is removed from the account of the borrower.

Examples.

For example, a borrower seeking a payday loan. The borrower will write a post-dated check for $ 500 to $ 570 to borrow a maximum of two weeks. Payday The creditor agrees to retain control until the next date of the borrower pay. At this point, the borrower has the option to buy control pay $ 570 in cash, or renew your loan by paying the $ 570 off and then immediately ask for another loan of $ 500 as a result of extending the ready for a further period of 14 days. However, in many Member States to extend the payday lending is not authorized by the law of the State. In States where there is a vast plan of payment, the debtor May choose to opt for a payment plan.

The Consumer Federation of America, conducted a survey of hundreds of payday loan sites recently. The results showed that these lenders offer loans from $ 100 to $ 1500, $ 500 with the most frequently offered. The charges range from $ 10 to $ 30 $ 100 to $ 100 borrowed. Most often, the rate was $ 25 to $ 100, or 650% of annual interest rate (APR) if the Payday loan is repaid within 14 days.

Emergency financial exploitation for profit.

Critics say payday lenders take advantage of temporary financial difficulties consumers to make a profit. The payday lenders often target their services to the poor or young people with low income. Borrowers simply can not understand that the high APR can trap in a cycle of debt, where they have several times extended the loan and pay additional taxes more and more every 14 days until that they can save enough money to pay the loan and break this dangerous cycle. He believes that the payday lenders disadvantage the poor, compared to the middle class who pay low interest credit cards.

Meanwhile, supporters say that many people who apply for Payday Loans have already ruined any other alternatives available. They are unable to obtain a bank loan or a credit card due to serious problems with credit history.

Cost of Payday Loans.

Supporters of Payday Loans assert that the costs of processing of these loans are no different from other loans. It is said that interest rates low to moderate amounts borrowed short term and would not be profitable. For example, a $ 200 one-week loan at an interest rate of 20% the lender give only 72 cents of interest, which would not cover the costs of treatment.

Defenders of payday lenders that treatment costs are much lower than costs for mortgages and other loans normally. Beyond Payday lenders require proof of income of the borrower and employment, whereas traditional donors loan fails to complete credit checks and the value of the debtor's ability to repay the loan.http://www.emergencybadcreditloans.com/