What is a payday loan?

How is a payday loan different from other kinds of credit?

A payday loan (also called a cash advance) is a small dollar amount loan.

Normally, this loan is for up to $500. ($300 to $400 loans are very common in the industry.) Some payday loan companies claim they give loans of up to $1,000.

Getting a payday loan normally doesn't require a credit check.

Unlike bank loans or credit cards, a borrower secures the payday loan with the promise to pay back the loan from his or her payheck. (Hence the term "payday loan"--a loan that is paid back on the next payday.)

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