A payday loan is a high interest short term loan through which a lender might give you the money as cash, load the funds onto a prepaid card, or electronically deposit the money into your checking account.

Payday loans are generally due on your next payday. You must either give the lender access to your checking account by electronic debit or write a post-dated check for the full balance in advance, so the lender can deposit your check when the loan comes due. Lenders sometimes require a borrower to provide a paystub or benefits receipt or provide the amount of their income.

Payday Loan Stats from Bankrate

• Twelve million Americans use payday loans every year.

• The average payday loan is $375 on a two-week term with an average of $520 in fees.

• Texas has the highest APR on the average payday loan at 664 percent.

• Only 14% of payday loan borrowers can pay back their loans.

• States without regulations can have payday loan rates range from 391 to 521%.

• A slight majority of Americans, 55%, live in the 28 states where payday loan laws are permissive and less regulated.

• 58% of payday loan borrowers struggle to meet monthly expenses.

• 80% of payday loans are taken out within two weeks of paying off a previous payday loan.

• The majority of payday loan borrowers take out multiple loans.

Depending on state law and individual lender practices, other loan features can vary. For example, payday loans are often structured to be paid off in one lump sum payment, but interest-only payments ("renewals" or “rollovers”) are possible in some states. In some cases, payday loans may be structured so that they’re repayable in payments over a longer period of time, called “payday installment loans.”

The cost of the loan may range from $10 to $30 or more for every $100 you borrow. So a typical two-week payday loan with a $15 fee per $100 borrowed equals an annual percentage rate (APR) of almost 400 percent.

You may also have to pay additional fees to your bank or credit union if there isn’t enough money to cover the loan payment when the payday lender tries to take the money you owe out of your account or cash the postdated check. This is on top of fees you’re already paying the lender. State laws and other factors can influence how much you can borrow and the fees you're charged. Some state laws restrict or prohibit payday lending.

While payday lending may seem like a short-term solution it never really solves the problem. A Payday lending typically increases a financial issue even if the defaults are delay. Payday lending could be a last resort, but you have a income problem if a payday loan is your answer to pay recurring bills or essential items The payday loans are being used to pay for unique non-recurring purchases and our advice would be to wait save spend the money when you have the money instead of paying more than what it's worth.

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