Payday loans are those high interest temporary loans that people take out when they need money quickly for some unexpected expense. These loans should only be considered as a last resort because their high interest fees make it too easy to end up in debt in very little time.
There are several things that make these loans incredibly popular despite the risk of these loans. First, it only takes a few minutes to apply for one of these loans and you can often get the money the same day you apply, which is great for emergency situations. Another big draw of these loans is that there is no credit check since you make out a post dated check that the loaning company cashes on your next payday getting their money right from your check.
However, since interest rates on these loans are 15% or higher it makes it difficult for living from check to check to make what is left of their check after paying back the loan and interest to make it through to the next payday without having to take out another loan. This usually means that after taking out just one or two of these loans many borrows find themselves locked into a cycle that is difficult to break as they get deeper and deeper into debt.
Many people who get into the payday loan cycle of borrowing and paying back end up in deep debt within just a few months. These loans are seen as such dead ends that some states limited the amount of interest these companies can charge and still others will not allow these companies to make loans within their state.
However, with so many of these companies giving loans over the internet many states find that their efforts to protect their citizens from these high interest loans are being sabotaged by the citizens themselves.