Are Payday Loans a Scam?

Payday loans are also known as cash advances, payday advances or paycheck advances. These financial products are short term loans, where the amount of the loan varies between $100 to $500 but the amount can sometimes rise to $1500. A borrower can usually expect to pay back an amount somewhere between $15 to $30 per $100 borrowed. When when you put this in terms of APR the rates are between 300 to 800 percent.

Paycheck advances have have been on the recieving end of a lot of bad press in recent times. This is probably because of the questionable practices done by payday advance institutions. The practice that receives the most criticism is the high interest rates of payday loans. The high interest rates are charged because the loans are much smaller than normal loans and borrowed over a short period of time and this means that payday loan institutions would not make any profit if they charged rates that are similar to typical loans.

Another reason paycheck advances are sometimes thought of as scams is that borrowers can sometimes get stuck in a circle of debt and it can sometimes be difficult to pay back the loan. For this reason, borrowers must make sure they are able to pay off the loan come their next payday. It is vital that borrowers have a financial plan set up and do not take out a cash advance (or any loan) without proper consideration.

As you can see, it is easy to see why cash advances are sometimes criticized. However, most applicants who make a payday loan application have already tried all other options available to them and most of the time, the only option they have left to fix their money problem is to take out a cash advance. In this situation they can be very useful and can actually save the borrower money when compared to credit card fees.

Article Source: http://www.articlecafe.net

Andrew manages a number of finance related websites. For more information and advice on no fax payday loans or faxless payday loans as they are often called, visit the links above.

Find Products and Services Related to This Article in the ArticleCafe Discount Store

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5 

Not yet Rated

Click the XML Icon Above to Receive Loans Articles Via RSS!

Additional Articles From - Home | Finance | Loans

• Loans for unemployed tenant- Jobless and homeless can easily cope up with urgent needs - By : Stephen wall
  
• Instant Pay Day Loan - By : Stuart Bekingnal
  
• Loans for bad credit-Forget the worry about blemished credit only have cash - By : Andru Simon
  
• Unsecured installment loans: Easy monthly installment for your needs - By : Angel Soffy
  
• Signature Loans That Do Not Require Collateral for People with Very Bad Credit - By : Kevin Dsilwa
  
• Medical loan for surgery: Easy financial assistance at the time of need - By : Stuarts Law
  
• Loans Unemployed Bad Credit – Exempt from Financial Crisis - By : Andrew Smith01
  
• Get Rid of All Fiscal Crunches with the Help of Cash Advances - By : Bob Moore
  
• Payday Loans with No Credit Check – Bad Credit History as if Good to Get Cash - By : Bob Moore
  
• Loans for unemployed-Impeccable means of generating fast cash for a jobless one - By : Noster Arnold