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Payday Loan companies are popping up on what seems like every block these days. They are all over the Internet, they are all over the phone books, and payday loan companies are all over city streets. A lot of people ask me, how do they work? Or, how much do they charge? Maybe even, aren’t they predatory lenders?

The answer to all of those questions is the same: It Depends. All payday loan companies do things a little differently. They may have different criteria for giving you a payday loan. Each one may charge a little more, or a little less than another payday loan company. As a consumer, it is your job to decide whether or not you need a payday loan. It is your job to compare the fees charged to borrow the money. It is your job to pay the money back on time to avoid late fees, slow payments and charge-offs on your credit.

Payday loan companies lend short term cash advance loans. Usually between 0-,500. Some companies will do bigger loans over longer terms, but that always seems like a bad deal. You see, people that need payday advance loans often do not qualify for conventional unsecured loans at good interest rates. If they did, they would go down to a bank and get the money. So the payday loan companies are lending to people that have a very high chance of going delinquent on the loan. Make no mistake, the companies are in business to make money. The loans that do get repaid on time have very high loan charges over the one or two weeks that they are advancing you the money. On an annualized basis, the APR can appear to be 100%, 200%, 300% or more. Of course, you are not paying that because you are borrowing the money for a week or two, not a year. The truth in lending act requires the payday companies to disclose the annual rate even though the loans are short term.

How do you decide if a payday loan is right for you? Sometimes people make a decent amount of money every month and even though they try to sock away some cash for unexpected emergencies, it isn’t quite enough. If you have never needed a payday loan before, but something happens where a little short term cash can help you out of a really tight spot, a payday loan may work for you. If you are in a position to pay back the money on time, that is. Some common uses for payday advance loans are vehicle repairs and medical bills.

However, if you are one of those people that is getting one payday loan to payoff another payday loan, there are obviously more ongoing issues in your situation and it may require professional help from from either a debt counselor or an attorney to get out of the payday loan cycle.

Most payday loan companies do not like lending to people that have outstanding payday loans. There are exceptions though.

The normal requirements for an online payday loan are a checking or savings account (they will need the account number and routing number) and a job. The different companies have different policies on other sources of income, like SSI, Child Support, and so on.

If you qualify for another type of loan, or you have a credit card that you can use to pay an unexpected bill, do that. Payday loans are not a preferred source of money. However, for many people, payday loans can be the only way to get a lot of money in a short amount of time to pay outstanding bills. If you or someone you know are considering a payday loan, please consider all of the advantages and disadvantages of using them before you agree to their terms.

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