For those who live paycheck to paycheck, sometimes bills and other necessities involved with money cannot wait another week.  This creates for a rush to the local payday loan center.  Cash advance, or payday loan, centers allow us the opportunity to get money when we need it, even if it’s a week or two before our next paycheck.  The process is simple, almost too simple, creating a false security that you can borrow money and pay it when you have money again.  However, many don’t realize that payday loans are an extremely expensive way to borrow money.

 Payday loans are typically given in cash and secured by the borrower's post-dated check that includes the original loan principal and accrued interest. The maturity date usually coincides with the borrower's next payday. On the maturity date the lender processes the check traditionally or through electronic withdrawal from the borrower's checking account if the borrower does not first repay or service the loan in person. Before loaning you money through a payday loan, lenders will need proof that you have a regular income, a permanent address and an active bank account.
 
Payday loan centers are known for charging inflated "service charges" for the service of cashing a "payday advance" — effectively a short-term (no more than one or two weeks) loan for which charges may run 3-5% of the principal amount. There are many different fees and interest charges that are applied to the original amount of the loan, and this is the cause for such high expenses of borrowing from payday lenders. Payday lenders have even been called “loan sharks” for their high interest rate, typically 250% or higher when annualized. Payday lenders have also been criticized for specifically targeting the young and the poor.

Before you rush to the nearest payday loan center when you need money instantly, it is really important to consider all of the options and underlying consequences. Do you really need to take out a loan at this moment, or are you able to get by until your next paycheck?  If you need money immediately, try to make other arrangements.  Some employers allow their employees to cash in their vacation day.  Or, you could simply borrow money from your family and friends.

If you truly do not have any other options other than getting a payday loan, it is crucial that you only borrow an amount that you are completely certain you can payback (and by the date you agree to on the loan contract). Do not rush into any loans. It is important to inquire about all of the fees, charges and interest rates that apply to you, while also making sure that you understand the charges you will owe if you can't pay the loan back on time.

Last of all, do not put yourself more in debt by working with various payday/cash advance loan centers.  It is a terrible idea to borrow money from a loan center to pay back a loan from another center.  Just the same, if you are extending or "rolling over" the loan that you had with the same lender, you could find yourself in serious financial difficulty. The fees, charges and interest will add up quickly on these types of loans, which can put you into serious debt.