1The Principle Behind Instant Cash Payday Loans

A payday loan is basically a cash loan for the short term that is expected to be repaid on your next payday.

You will either have to provide a post dated check or access to your bank account so an electronic transfer can be scheduled.

Since the loan is given out quickly and there is no credit check being done, the finance fees associated with payday loans are enormous.

On your next payday, the loan can be paid off in three ways:

• Paying in cash
• Allowing your post dated check to be deposited in the bank
• Paying the finance charge and letting the loan roll over to another payday period

2Terms for Instant Cash Payday Loans

Depending on the legal maximums per state, the size of payday loans range in size and can be anywhere between $100 and $2000.

Loan terms last for an average of two weeks and the loans have a typical annual interest rate (APR) cost of 400% or more.

The finance charge for borrowing $100 is between $15 and $30.

3Requirements to Get a Payday Loan

To get instant cash with payday loans you can go to pawn shops, check cashers or payday loan stores, and even some rent-to-own companies.

All that is required for you to obtain a payday advance is an open, well-maintained bank account, a stable income source, and identification. Lenders do not run a full credit check on borrowers and they don’t question them on their ability to make loan repayments.

4Online Payday Loans

To get these loans consumers have to apply online or via faxed application forms.

Processed bank loans are then deposited into their bank accounts and then electronically paid back on the next payday.

Many of these loans are designed to renew automatically on consecutive paydays with the finance charge being withdrawn from your account electronically.

6The Risks of Not Repaying Payday Loans

Failing to repay a payday loan results in bounced check fees from both the payday lender and your bank.  It will also be reported to the credit agencies.  This will lower your credit rating.

According to research findings, it is estimated that filing for bankruptcy is twice as common for persons who use payday loans compared to those who don’t.

Some lenders are known to resort to forceful collection tactics. Others threaten borrowers with criminal penalties while others sue for damages under civil bad check legislation.

It is therefore important to think about whether a payday loan is truly your best option.

7What Alternatives Are There to Payday Advances?

There are a few situations where a payday loan is the perfect option, however in most instances, it is a good idea to try the other options available to you first.

If all of these fail to materialize you can go for an emergency payday advance but be sure to completely understand all the details.  Only borrow from a trustworthy lender who charges the lowest rates and fees. Just obtain an amount that you can repay immediately as soon as you get your next paycheck.

Some of the other options that may be available include:

• Negotiating a payment plan with creditors
• Obtaining a salary advance
• Approaching an FDIC-approved lender for a line of credit
• Borrowing from relatives and friends
• Asking for a grace period to settle a creditor’s bill
• Using your credit card for a cash advance
• Taking out a conventional small loan
• Borrowing from your savings account
• Using bank overdraft provisions
• Charging your credit card with the required amount

8Pros and Cons of Payday Loans

Using a payday advance comes with the following advantages:

• You can get as much as $2000 in one day
• You don't need good credit
• You only need to give proof of steady income
• The application process is quite quick and easy

The disadvantages payday loans are:

• Payday loans are only for small amounts
• The finance charges are very expensive
• The timeframe to repay the loan is very restrictive
• Missing the timeframe can double or triple the finance charges

9Research First

If you decide that taking out a payday loan is something you need to do, it is important to spend some time researching to make sure you are working with a reputable lender.

There are many legitimate payday lenders out there, but there are also many scams who will make a deal with you and then change the terms to make it more difficult for you to repay the loan.  There are also lenders who will deduct more than the agreed upon amount from your bank account.

Check with the Better Business Bureau and also research online.  Do a Google search for "(name of lender) scam".  You can also use terms like "does it work", "complaints", etc to find out what other people are saying.

Keep in mind that many people will complain about payday loans because they did not understand the terms or the tremendous finance charges.

You should be looking for feedback from people who seemed to be well informed.  If the lender did what they said they would do and people just aren't happy about it, they are most likely legitimate.  However, if they didn't do what they said they would, or they took additional actions, you should avoid them.

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What Do You Think?

Do you have any additional pros and cons of payday loans that other people should be aware of?