What are Payday loans

Payday loans are relatively small, short term, unsecured, consumer loans. Consumers apply for payday loans through the Internet. The loans range from one hundred dollars to five hundred dollars. If approved, the loan amount may be wired to the applicant’s checking account overnight. The loan term usually range from four to eighteen days. They are meant to coincide with the applicants next payday. Some lenders interest fees on the loan varies, depending on the length of the loan. Other lenders charge a flat fee regardless of the length of the loan. One may be offered to roll over the loan, extending the loan until the next payday. When rolling over the loan, subsequent fees are doubled. Usually, popular, reputable, online lenders only allow consumers to roll over the payday loan up to two times.

A new report on payday lending in the state of Washington indicates that payday loans grew by eighty four percent from 2000 to 2003. The report represents more than one billion in such loans. Washington 's Department of Financial Institutions report indicates the analyzed companies and offices loans averaged three hundred seventy eight dollars, with a fee of forty nine dollars. The average term was eighteen days.

Though each state’s charges vary Washington law places a cap of fifteen dollars for every one hundred dollars on the first five hundred borrowed. There is a 10 dollar cap for every one thousand dollars for loan amounts over five hundred dollars. The loan maximum is seven hundred dollars, while the maximum term is forty five days. The report compared the cost of fourteen and thirty day payday loans with other short-term loan options.

Overall, it was concluded that bank overdraft fees and advances on credit cards and bank credit lines are generally less expensive than the Cash Advance Stat - Some states limit payday loans to a total of three hundred dollars with a fifteen percent fee. In most cases the loan and the fifteen percent fee must be paid back within fourteen days, thus, an equivalence of a loan with a three hundred ninety one percent annual interest rate.