Payday Loans


Payday loans are very common in the United States. These loans are very useful for everyone who runs short of cash at any time. Of course, like all other loans and credit facilities, these loans, too, have some rules governing them. These loans can surely get you out of some sticky situations. Especially, towards the end of the month, when you have spent all your money and are in need of money, these loans turn out to be a great help.

Payday loans are usually due on the borrower's next pay check date. The regulations on these loans say that the interest charged on these loans cannot exceed 30% for the two week period. The normal rates of interest that are charged on these loans are from 15% to 30% for the two week period. It sure is a huge interest for such a short term, but irony is that the interest charged is so high just because of the short term of the nature of the loans. If you translate these loans to an annual percentage rate they come to about 390% to 780%.

There are two ways to pay back payday loans. The most preferred method is to personally make the payment to the payday lender at the end of the term. The other method of repayment of the loan is through a post dated check. For example, when you take a payday loan, you are required to give a post dated check for the date of the next pay check. This post dated check includes the interest amount also. So, in case you fail to go and make the payment personally, the lender can cash in this check directly from your account.

The regulations and rules that govern the payday advances differ from state to state, as each state has its own regulations regarding loans. Payday loans are indeed common in the United States, but not so in all the states! Payday lending is legal and regulated in 37 of the states and in the other 15 states; it is either not legal or not feasible with the laws of the state.

There may be laws that explicitly ban payday loans in the state, or they may not be legal because of the high rates of interest that are charged for the loans. There are many lenders who want to make these practices legal in these 15 states, while others are all for prohibiting these loans which attract high interest rates.

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