A payday loan or cash advance is a small, short-term financial instrument that allows a borrower to cover his or her expenses until the next paycheck. Typically, the amounts of such loans range of $100 to $1500, on 10-14 days term and have enough high interest rates (APR) from 390 to 900 payday loan percent.
Payday lending is regulated at the state level – each state has its own laws regarding payday loans. Meanwhile, the U.S. Congress passed a law in October 2006 that limits lending to military personnel at 36% APR. The Defense Department was concerned that payday lenders could cause financial challenges for soldiers and even jeopardize security clearances.
Some federal banking regulators are trying to limit or prohibit payday loans not just for military personnel, but for all customers. The high interest rates are considered as a hard financial blow to the lower and middle class people who are the primary borrowers.
Lenders prove that payday loans are often the only available way to get money for customers with bad credit history or who can not obtain another lower-interest alternative, such as a bank loan or a credit card. In their turn, critics say that the most of borrowers find themselves in a worse financial situation when they have to repay their loan. Many of them get trapped into a cycle of unsecured debt.
Statistics compiled by the Center for Responsible Lending show that the large part of the payday lending’s profit comes from repeat consumers who can not repay prior loans on the due date and instead prolong their loans, paying extra fees each time. Please visit here InstantPayday.com !
