Payday loansare very small loans that are short-term. Typically they are meant to be paid back within two weeks. You can find payday loans tores in several places, and the fees range anywhere from $15-$25 for every $100 taken out.
Payday loan stores were not very relevant a while back, but now, especially because of the bad state of the economy, payday loans are said to have more stores than even some popular food chains.
The process of using payday loans is not complicated. Someone who wants to take out money will have to write a check for the amount they want to borrow plus associated fees. The check is to be postdated until the borrower’s next pay period. If a borrower is unable to pay the full loan back once it is due then it rolls over.
A borrower would then have to pay the fees associated with the loan, but the principle will not be paid off in full. The fees associated with a payday loan remain in place until the entire loan has been paid off.
Consumer advocates against payday loans
There are several consumer advocates and policymakers who are not happy about payday loan stores becoming so popular, and they refer to them as being predatory. They point to the high annual interest rates, which tend to be 300% and up.
Consumers say they need payday loan options
Customers who make use of payday loans on a regular basis say they cannot have survived certain financial struggles if they did not have access to these microloans. Consumers say these loans are easy and convenient. What else are they to do when conventional banks will not give them money?
Currently there are 12 states that have a ban on payday loans, and Congress has passed legislation designed to limit payday stores from giving money to armed services members.