A payday loan is generally defined as a short term high cost loan that becomes due for payment on your next payday. Such types of loans are also known by various names like payroll loan, salary loan and cash advance loan, etc. Rules and laws regarding such type of laws varies between different countries and even states. A payday loan can be applied online or is available through a storefront payday lender. The loans are generally of smaller amounts and the repayment is generally linked to the borrowers next payday or whenever the next payday is received. To be precise the date is set after an agreement between both the parties.
The repayment amount generally consists of the loan amount with interest and the fees charged for giving the loan. The fee differs from state to state and is generally calculated between $10 to $30 for every $100 and the complete amount should be paid in a onetime lump sum amount. Generally the interest rates could go as high as 400%. The mode of loan repayment is ideally done through a post dated cheque or one can authorize the lender to electronically debit form the borrowers account. These types of loans come in handy when you encounter an unexpected purchase or an emergency at home and do not have the required cash. To explain it further these can be termed as stop gaps until the next pay cheque arrives. Since the interest rates are high there a few tips to be kept in mind before opting for a payday loan. The first and an important tip is to borrow smaller amounts which can be repaid easily. Also make the repayment your top most priority as the late fees might add up later. Do not make them a habit and only use them for emergencies.