Payday loans are generally small loans (maximum $500-$1,000) that don't require a credit check. Payday loans have short terms and must be repaid quickly, usually within a few pay periods. Payday loans are marketed as a way to help you cover your expenses until your next paycheck. Most payday lenders are not licensed, bonded or regulated by important consumer laws. These loans can be costly. Borrowers should use them with caution and pay the amount back as soon as possible. These loans are usually priced at a fixed dollar fee, which represents the finance charge to the borrower. Because the loans have such short terms, the cost of borrowing is very high. In return for the loan the borrower usually provides the lender with a pre-dated check or debit authorization.

Generally, anyone with a checking account and steady income can get a payday loan. However, it is most common for borrowers who don’t have access to credit cards or savings accounts. Since these loans do not require a credit check, people with no credit or credit problems often choose this option.

Payday loans can be a good way to quickly and easily borrow cash during an emergency if you don’t have other financial options. For example, you might use a payday lender for an immediate and temporary financial need such as a medical bill, car repair or other one-time expense. Payday loans are helpful for people who don’t have credit cards or savings available. Because the loans do not require a credit check, they are easy for people with financial problems to obtain.

It is very important that you repay a payday loan as soon as possible. Many people get into trouble with these types of loans when they are unable to quickly repay the debt. If you can’t repay the loan at the end of the term, you’ll be charged expensive additional fees. It is very costly to be stuck in a payday loan cycle for a long time and can lead to larger financial issues. Payday loans are also much more expensive than other methods of borrowing money. In most cases the annual percentage rate (APR) on a payday loan averages about 400%, but the APR is often as high as 5,000%. A standard credit card has an APR of 12% and a standard loan APR is around 7%. If possible, it is better to use a credit card or tap into your savings in the event of an emergency.

Its best to find an alternative to this type of borrowing. You can try any of the following: Negotiate a payment plan with the creditor; Receive an advance from your employer; Ask a relative to lend you the money; Apply for a traditional small loan. If you have evaluated all of your options and decide an emergency payday loan is right for you, be sure to understand all the costs and terms before you apply. Look for payday lenders that offer the lowest rates. Don't sign up for any loan offers that require you to make additional purchases or respond to product offers. Make sure they have customer service contacts available (preferably phone contact).