Q:

What are payday loan lenders?

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Quick Answer

A payday loan lender is a type of lender that offers a short-term loan that is generally payable in full by the borrower's next payday, according to the Consumer Financial Protection Bureau. These loans are usually less than $500 and secured by the borrower's personal check, which the payday loan lender holds until the specified payday and then deposits it for payment.

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Full Answer

The cost of payday loans varies, but is usually between $10 and $30 per $100 borrowed, notes the Consumer Financial Protection Bureau. The fees on payday loans are steep; for example, some may have a computed annual percentage rate of nearly 400 percent. Some states regulate how much payday loan borrowers can borrow and how much payday loan lenders can charge for loaning money.

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