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Glossary
Payday Loans

Have you seen advertisements for payday loans?

  • A payday loan is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday.
  • A payday loan may also be called a "paycheck advance" or "payday advance."
  • Usually the initial term for the loan is two weeks.
  • The loans are also sometimes called "cash advances," although that term can also refer to cash provided against a prearranged line of credit, such as a credit card.

Here are the answers to some frequently asked questions about payday loans:

Payday Loan Frequently Asked Questions

What is the term of a payday loan?

What is the average amount borrowed?

How does the borrower pay the lender?

Do most borrowers repay their payday loans?

Is there an additional charge if a borrower cannot repay the payday loan?

Is it common for borrowers to extend (rollover) loans?

How much do payday lenders make?

Are payday loans legal?

Sources:

  • Consumer Federation of America web site, www.paydayloaninfo.org/
  • Credit Abuse Resistance Education Program (C.A.R.E.), www.careprogram.us
  • Center for Policy Alternatives, www.cfpa.org
  • "'Fringe' Lenders: Traditional Institutions Search for Alternatives," Bridges, Winter 2007-2008, Federal Reserve Bank of St. Louis
  • Pymnts.com website, https://www.pymnts.com/
  • Statistics provided by the Center for Responsible Lending

 

What is the average amount borrowed?
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For a full listing of states and their payday loan regulations click here.