Payday loans refer to loans from lenders for small amounts of money, usually less than $500 at a time, with loan payment due on applicants' scheduled pay days, as stated by the Consumer Financial Protection Bureau. Payday loans coordinate with individuals' payment schedules. Much like other monthly payments, such as credit card bills, people establish set times for repaying payday loans; lenders typically withdraw requisite payment directly from individuals' bank accounts.
The amount due for each incremental payday loan varies, but lenders typically set pre-determined payments with individuals through set schedules. As with credit cards, loan holders may make payments in full each month, or make minimum payments. Loan payments cover various items, and contain differing features and requirements; however, all share several common characteristics.
Payday loans are less than $500 and require payment every pay day. They also require individuals to give lenders access to banking or checking accounts, ensuring payment arrives on time.
The lifespan of payday loans varies; some exist as one-time lump sum payment structures, while others accrue repayment over time, usually adding interest charges. The cost of payday loans covers a large range and typically includes a high annual percentage rate, sometimes up to 400 percent. Eligibility for payday loans differs among individuals and among states, as some state laws prohibit payday loans.