Payday loans are also called cash advances, and are relatively small (usually not for amounts exceeding $1,500), short-term loans that do not require credit checks. 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 people who have immediate cash needs due to certain emergency situations, such as a car repair or necessary medication.
Cash is given to the borrower, who gives the lender a post-dated check for the loan principal plus a loan fee, along with any accrued interest. The maturity date on the loan will typically be the borrowers next pay day, which is when the lender will process the check.
Payday loan lenders are normally found in small shops or franchises, but can also be found at large financial institutions who will offer variations of payday loans.
If a borrower takes out a payday loan for $100, they will write a post-dated personal check for $115, which includes the principal balance and the loan fee. The borrower will receive $100 in cash. The lender will hold this check for up to two weeks, at which time the borrower will be given the option...
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