Truth About Payday Loans

Payday Loans may be the most misunderstood financial product available today. That misunderstanding has created some "common wisdom" that is really not so wise. We will provide you with information here that will help you understand Payday Loans better: we will tell you what they are, when they should be used, and why they are a reasonable financial alternative for you to consider. We'll arm you with enough information so you can see where the "common wisdom" found many news stories about Payday Loans is flawed and not really so wise.

A Payday Loan Is ...

  • A short-term loan that is due typically at your next payday.
  • Based on a check you write the lender, who will hold the check until the date you agreed to before depositing the check. The lender will lend (some use the term "advance") you the amount of your check less their fee for the transaction. In some cases, it will be possible for you to redeem your check with cash before it is deposited.
  • Limited to a maximum check of $300 by California law.
  • Limited to a lender fee of at most 15% of the face amount of the check. The only other fee you can be charged in California is at most $15 if your check is returned for any reason.
  • Limited by California law so that you may only have one payday loan outstanding with any particular company no matter how many locations they have.
  • Not able to be "rolled over" (you cannot just pay another fee and not pay back the amount of your check) in California.
  • Less expensive than bouncing a check you give a merchant.

A Payday Loan Is Not...

  • A loan for long-term use.
  • A loan that charges interest or additional fees if you make arrangements to pay after the due date.
 
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