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.
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.