Cash Advance Payday Loans

The advertisements are on the radio, television, the Internet, even in the mail. They mention to payday loans - which come up at a very high price.

Check cashers, finance companies and others are making small, short-term, high-rate loans that spell by a assortment of names: payday loans, cash advance loans, check advance loans, post-dated check loans or postponed sedimentation check loans.

Usually, a borrower composes a personal check collectible to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Fees charged for payday loans are usually a percentage of the human face value of the check or a fee charged per amount borrowed - say, for every $50 or $100 loaned. And, if you widen or "roll-over" the loan - state for another two hebdomads - you will pay the fees for each extension.

Under the Truth in Lending Act, the cost of payday loans - like other types of credit - must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a annual basis).

A cash advance loan secured by a personal check - such as as a payday loan - is very expensive credit. Let's say you compose a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender holds to throw the check until your adjacent payday. At that time, depending on the peculiar plan, the lender sedimentations the check, you deliver the check by paying the $115 in cash, or you roll-over the check by paying a fee to widen the loan for another two weeks.

In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan three times, the finance charge would climb up to $60 to borrow $100.