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What is a Payday Loan? Comments

  • By Jocelyn Black Hodes, DailyWorth's Resident Financial Advisor
  • June 21, 2013

A payday loan is a type of short-term borrowing where an individual can quickly borrow a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash. The lender holds onto the check and cashes it on the agreed upon date, usually the borrower's next payday. These loans are also called cash advance loans or check advance loans. Payday lenders typically have a bad reputation, because they are considered to take advantage of their borrowers who tend to have low incomes and bad credit.

 

See Also:

"How I Paid Off $16,000 in Student Loans"

Small Loans for Small Bills

Why I'm Front-loading School Costs

When Debt Can Make You Richer

Should You Borrow Your Own Money?

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