Payday Loan
A payday loan is a type of short-term loan that is typically due on the borrower’s next payday. It is a high-cost, unsecured loan that is usually used to cover unexpected expenses or to bridge a temporary gap in cash flow. Payday loans are typically for small amounts, usually ranging from $100 to $1,000, and are often used to cover emergency expenses such as medical bills, car repairs, or rent. The loan is typically repaid in full on the borrower’s next payday, or in installments over a period of time.
History of Payday Loans
Payday loans have been around for centuries, but the modern version of the loan originated in the United States in the early 1990s. The loans were initially offered by storefront lenders, but have since become available online. The loans are typically marketed as a way to bridge a temporary cash flow gap, and are often used by people with poor credit who may not qualify for other forms of credit.
Comparison Table
| Type of Loan | Interest Rate | Term Length |
|---|---|---|
| Payday Loan | High | Short-term |
| Personal Loan | Low-Medium | Medium-term |
| Mortgage | Low | Long-term |
Summary
Payday loans are a type of short-term loan that is typically due on the borrower’s next payday. They are high-cost, unsecured loans that are usually used to cover unexpected expenses or to bridge a temporary gap in cash flow. For more information about payday loans, you can visit websites such as the Consumer Financial Protection Bureau, the Federal Trade Commission, and the National Consumer Law Center.
See Also
- Personal Loan
- Mortgage
- Credit Card
- Car Loan
- Student Loan
- Debt Consolidation Loan
- Home Equity Loan
- Small Business Loan
- Line of Credit
- Cash Advance
