What is a Payday Loan?

A payday loan is a short term loan. You borrow money against a post-dated check. You pay-off the loan with your next paycheck. Payday loans are an emergency loan to cover an immediate temporary cash shortage that must be paid before your next pay day. Payday loans are no longer restricted to storefront operations and also are available online.

The basic payday loan is unsecured credit and repayment is typically due about two weeks later. The interest rate varies with state law, but rates as high as 30 percent for a two-week period are not unusual. In general, the fees are usually around $15 for every $100 up to a loan of $500 and around $10 for every $100 over $500. Government regulations require that these fees be quoted as percentage rates (APRs).

The maximum loan you qualify for will be based on approximately 25% of your gross monthly pay. This has proven to be the percentage that enables you to meet your financial emergency and still pay back the loan in a timely manner. You should not take out your maximum qualified amount from more than one lender at a time. Many people have gotten into trouble by doing this.

Payday loans are not targeted at desperate borrowers who cannot get money elsewhere. No credit checks are carried out and all that is required in most cases to get the money is a bank account. The money is paid into the borrower's account the same day or on the next business day and is deducted from the account with charges on the borrower’s next pay day.

The fee for this loan, though not cheap, is generally less costly than overdraft fees, exceeding your credit card limit, and it will not affect your credit standing in any way. Payday lenders who are members of CFSA are not connected to credit reporting companies or to the credit bureau so they cannot be used to build credit. You get the cash, for emergencies, or to cover bills, due before your next paycheck, immediately.

Remember:

• Loan only from established lenders, who are members of CFSA (Community Financial Services Association)
• Loan only from one lender during any given time.