Sudden Attacks!

A short term loan which allows a borrower to obtain necessary funds to finance the expenses until the next salary date is called a Pay Day Loan. The period of repayment of Payday loans is very short, about 10- 14 days and the loan amount ranges from $100 to $1500 with interest rates shooting up to even 900 percent. But, as per law established by US Congress in 2006, the soldiers would be entitled to only 36 % Apr on Payday Loans.

Payday loans are helpful in securing funds for people with bad credit history, but these loans are criticized because of the high interest rates which the high and lower middle classes of people cannot afford. This results in a vicious trap for these borrowers. That is why; efforts are being made by the federal baking regulators to control the spread of Payday loans.

One can choose to physically visit the lender's office to borrow the amount and can again walk in to give a check to the creditor after the loan period of 14 days is over. The amount payable would be the loan amount plus the charges. On failure to repay the loan by the debtor, the lender can electronically withdraw money from the borrower's account. This is Retail Lending.

Payday Loans can also be obtained online. One has to fill an electronic form along with Social Security Number, Bank account details and other personal information. The amount is directly transferred electronically into the borrower's account and the same process is applied during repayment.

Different people have different views about Payday loans. Some say that Payday loans do not differ much from other loans in terms of the processing costs. Again, these loans are secured by a proof of the borrower's income without having a credit check like the traditional loans.

As a matter of fact, the borrowers of Payday loans are those who had failed to pay previous Payday Loans!