Payday Loan

Payday Loan
A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash. The lender holds onto the check and cashes it on the agreed upon date, usually the borrower's next payday. These loans are also called cash advance loans or check advance loans.

Although the federal Truth in Lending Act requires payday lenders to disclose their finance charges, these establishments have gotten a bad reputation for their predatory lending practices. Most borrowers using payday loans have bad credit and low incomes. They may not have access to credit cards and are forced to use the service of a payday loan company. Even if the borrower feels the fee may be fair ($17.50 per $100 for seven days), that translates into a rate of more than 900% on an annualized basis. Most loans are for 30 days or less and can be rolled over for additional finance charges. Loan amounts are usually from $100 to $1,500.


Investment dictionary. . 2012.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • payday loan — UK US noun [C] (also payday advance, overnight loan) ► FINANCE a small loan from a bank, etc. that must be paid back when the borrower receives their next pay: »the payday loan industry »a payday loan business/company/operator take out a payday… …   Financial and business terms

  • Payday loan — A shop window in Falls Church, Virginia advertises payday loans. A payday loan (also called a paycheck advance) is a small, short term loan that is intended to cover a borrower s expenses until his or her next payday. The loans are also sometimes …   Wikipedia

  • payday loan — UK / US noun [countable] Word forms payday loan : singular payday loan plural payday loans a small loan that you can get very quickly and easily but which charges a very high rate of interest. People often take out a payday loan for the last few… …   English dictionary

  • payday loan — /peɪdeɪ ˈloʊn/ (say payday lohn) noun a loan extended to someone in need of immediate financial assistance on the proviso that it is repaid in a short period of time, at which point a further increased loan is often required, so that the debt… …  

  • payday loan — noun Small loan of money designed to help borrowers until their next payday …   Wiktionary

  • Loan shark — A loan shark is a person or body that offers illegal unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. They provide credit to those who are unwilling or unable to obtain it from more… …   Wikipedia

  • Loan — For other uses, see Loan (disambiguation). Finance Financial markets …   Wikipedia

  • loan — money lent at interest.A lender makes a loan with the idea that it will be paid back as agreed and that interest will be paid for the use of the money. Glossary of Business Terms Temporary borrowing of a sum of money. If you borrow $1 million you …   Financial and business terms

  • payday lender — UK US noun [C] FINANCE ► a person or an organization that lends money to customers who must pay it back when they receive their next pay: »State law allows payday lenders to loan up to $700, with interest rates of up to 15% per $100. payday… …   Financial and business terms

  • payday lending — payday lender UK US noun [C] FINANCE ► a person or an organization that lends money to customers who must pay it back when they receive their next pay: »State law allows payday lenders to loan up to $700, with interest rates of up to 15% per $100 …   Financial and business terms

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”