Payday Loan | Cash Advance

     A loan is a financial agreement in which a lender gives a borrower a certain amount of money, in which the borrower will repay within a certain amount of time. In other words, it is a temporary redistribution of financial assets. In many cases, the loan may be paid back in small regular installments called payments. The lender may ask for interest payments on the loan, and may assign penalties for late payments. There are two types of loans, secured and unsecured.

     A secured loan occurs when the lender is given a lien, or security interest, to the thing that is being purchased until the loan is fully paid off. If the borrower ever opts out of the loan, the lender would have the right to repossess the item and sell it. One example of a secured loan is a mortgage. In a mortgage on a house for example, the bank is given a lien on the title of the house until the debt is fully paid off. Another example of a secured loan is a loan on a new or used car. This type of loan if different than a mortgage on a house, however, because the life of a car is much shorter than the life of a house. Therefore, the amount of time a borrower has to pay back a loan on a car would be shorter than that on a house.

Check out http://en.wikipedia.org/wiki/Loan for more information about secured loans.

     Payday loans, also known as cash advances are small short term, high interest loans intended to cover vital expenses until the borrow receives his next paycheck. These loans are usually high interest loans with interest rates up to 400-900% The characteristic loans are between $100 and $1500, and usually have to be paid back within two weeks, the time it takes for the borrower to receive his next paycheck. In 2006 the United States Congress passed a law that capped predatory lending to military personnel at 36% APR. This is because officers were concerned that payday lending only worsened the soldier’s financial problems and interfered with military operation schedules.

     It has been shown that the majority of profits that payday loaners make is from repeat borrowers who cannot afford to pay off their existing loans, therefore have to pay late fees each time. Also, payday loaners do not check credit history, so payday loans are a great option for those who can not get other loans because of bad credit history. If a borrower knows that he can pay it back, payday loans are the best choice for quick and easy cash loans.

Check out http://en.wikipedia.org/wiki/Payday_loan for more information about payday loans.

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