Frequently Asked Questions

What is a Payday Loan?
Payday loans are short-term loans whose repayment is guaranteed by a legally binding check that is provided by the borrower. Referred to as "payday" loans, the agreement between the borrower and the lender are usually dependent on the borrower's payday as the expected date of payback.

How Do PayDay Loans Work?
Payday loan services allow a borrower to submit a check to the payday loan company with an agreed upon future date assigned to the check. The check, a legally binding contract to pay, secures the loan. The borrower then has two options - to repay the loan with cash before the agreed date or to allow the payday company to cash the check on the agreed date. If a payment is not made before the agreed date, the payday company cashes the check to collect payment.

What are the fees and rates of a payday loan?
Payday loan fees vary depending on the payday loan company, and is based on the amount the borrower is seeking to borrow. Typical rates start at roughly $17.50 per $100 borrowed. There are no fees associated with the payday loan outside of the loan rates.

What is a default on a payday loan?
A default on a payday loan occurs when a borrower's bank account does not have sufficient funds to cover the post-dated check provided when it is submitted to be cashed. Defaults on payday loans may incur additional "insufficient funds" fees which are added to the loan as well as late payment fees.

Do I have to borrow the entire amount of my paycheck?
Payday loan services are for your convenience and although you may borrow up to the maximum amount of your loan you are encouraged to borrow only a portion of your paycheck - the amount needed to handle your emergency money situation.

What are the advantages of payday loans?
Payday loans are an excellent resource for money emergencies. When compared to late fees assessed through late payments, money loss through missed work, and the additional damage that can occur when repairs to your home or vehicle are not made, payday loans become an excellent, cost-effective option.

What are the most common uses of payday loans?
Payday loans are most commonly used for:

- groceries
- gasoline
- vehicle and transportation repairs
- utility and water bills
- car payments
- rent payments

What are the disadvantages of payday loans?
Most opponents of payday loans look at the cases in which payday loan users become addicted to the ease at which payday loans work. The disadvantages of payday loans exist only when there is a client dependency on the payday loan service or in the case in which the customer defaults on the original loan terms, adding fees to the originally agreed upon contract.