Need extra money to get you to the next paycheck? Payday loans come to the rescue. However, you should be prepared to pay the price which is usually a hefty one. But there are steps you can take to minimize the financial damage.
What are Payday Loans?
Cash advance loans, post-dated check loans or deferred deposit check loans are high-rate loans and are intended to be used for short term. Emphasis here is on short term, usually 14 days since most of us get paid bi-weekly.
How does a Payday Loan work?
The old economy created the idea of living paycheck to paycheck. As if that wasnt bad enough. In todays economy many dont even get to the next paycheck. So, the potential borrower writes a personal check payable to the lender for the amount she wishes to borrow plus a fee.
The lender cashes the check and keeps the fee, of course. Ideally this type of loan will get the borrower room to breathe and he/she can pay off the loan when he/she gets paid.
Lets take a look at an example. Ms. Susan Borrower needs $200 and the cost is $30. She writes a check for $230 and the payday lender agrees to hold the check until her next payday that is usually...
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