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Payday loans are sometimes also known as cash advances, payday advances or paycheck advances. These useful products are short term loans, usually the amount of the loan varies from $100 to $500 but the amount can sometimes be higher. A customer can usually expect to pay back an amount somewhere between $15 to $30 per $100 taken out. When when you put this in terms of APR this translates to rates of 300 to 800 percent. Paycheck advances have have been on the recieving end of a lot of bad press recently. This is mostly due to the questionable practices done by payday loan companies. The practice that receives the most criticism is the high interest rates of payday advances. The high interest rates are charged as the loan amounts are much smaller than normal loans and taken out over a short amount of time meaning that payday loan companies would not make any profit if they had rates that are similar to typical loans. An additional reason paycheck advances are often considered scams is that borrowers can sometimes wind up stuck in a circle of debt and find it difficult to pay back the loan. Because of this, borrowers must ensure they have the funds in place to clear the debts on their next payday. It is vital that borrowers have a financial plan in place and do not apply for a payday advance (or any loan) without proper consideration. As you can see, it is easy to see why payday loans are often criticized. However, most people who make an application have already tried all other options available to them and most of the time, the only solution they have left to sort out their finances is to apply for a payday advance. In this situation payday advances can be very useful and can actually save the customer money when compared to credit card overdraft charges.
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The author owns a number of financial websites. For more information and advice on no fax payday loans or faxless payday loans as they are often called, click on the links above.
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