Since there is a lot of confusion about payday loans, we asked our Paydayloanfacts.com friends to to add a few payday loan facts to this blog. For anyone in the space, this is quite interesting:

Payday loans are a short-term loan that is covered by the borrower’s personal checking account. The process works by having the borrower write a check for the amount to be funded plus the finance charge and they receive their cash. On the next payday, the loan company will present the check to the bank to pay off the payday loan. If the borrower can’t or does not want to pay it off on the next pay period, then they will just pay the finance charge and the loan will be extended to the next payday.
Payday loans can be funded from $100 to $1000, depending on a few factors. Each state set a legal limit on how much a payday loan business can charge for interest, so this restricts the amount a bit. Also the borrower needs a good standing checking account, proof of steady income, and identification. All these factor into how much they will fund you for. These companies also will not perform a credit check on you, so they don’t consider if you have the ability to repay the loan, this is at your own risk. The average payday loan terms are usually for a 14 day period with the finance charges up to 400% annual interest rate. A good rule of thumb is a person will be expected to pay $15 to $30 per $100 that you have to borrow.

There are over 25,000 payday loan centers across the country, even rent-to-own companies, pawn shops, and check cashing stores have offered payday loan services as this is a great source of extra income for them. In the last few years an average of $25 billion dollars in loans were made with over $5billion in finance charges assessed to the borrower.

As you can see payday loans is a lucrative business for many companies that can provide a quick supplement to their profits. As the economy continues to struggle more people will look to payday loans to help continue to survive day to day. For the borrower, it is an expensive option to use and if you don’t stay on top of these loans and pay them off when they are due, you could be stuck paying 3 to 4 times the amount you originally financed.