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Payday Loan Cash
Payday loan
(also called a paycheck advance or payday advance) is a small,
short-term loan that is intended to cover a borrower's expenses until
his or her next payday. Typical loans are between $100 and $500, on a
two-week term and have interest rates in the range of 390 percent to 780
percent (APR). The loans are also sometimes referred to as cash
advances, though that term can also refer to cash provided against a
prearranged line of credit such as a credit card.
Though payday lending is primarily regulated at the state level, the
United States
Congress passed a law in October 2006 that caps lending to military
personnel at 36% APR. The Defense Department called payday lending
practices "predatory", and military officers cited concerns that payday
lending exacerbated soldiers' financial challenges, jeopardized security
clearances, and even interfered with deployment schedules to Iraq.
Some federal banking regulators and legislators seek to restrict or
prohibit the loans
not just for military personnel, but for all borrowers, because the high
costs are viewed as an unnecessary financial drain on the lower and
lower-middle class populations who are the primary borrowers.
Lenders say these loans are often the only option available to consumers
with bad credit or who cannot get a bank loan, credit card, or other
lower-interest alternatives. Critics counter most borrowers find
themselves in a worse position when the loan is due than they were when
they took the loan, with many getting trapped in a cycle of debt.
The industry's fast-paced growth indicates a highly profitable business
model. Statistics compiled by the Center for Responsible Lending show
that the majority ofthe industry's profit comes from repeat borrowers
who are unable to repay loans on the due date and instead repeatedly
renew their loans, paying fees each time.
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