Payday loans are cash advances on your salary. These are normally used in dire emergencies and the loan approval is instant requiring little or no documentation or checks.

Like everything in life payday loans too have positive and negative aspects, they are:

1. Payday loans can be availed by anyone. They are not based on credit reports or scores. So even if your credit is bad you will get a payday loan.

2. Payday loans help tide over emergencies like unforeseen car repairs, a house leak during a storm, or a sudden accident or illness.

3. You can apply for a payday loan over the phone or even online.

4. The approval is instant and the money will be with you within 24 hours.

5. A payday loan is immediate cash fluidity but ensure that the full amount is returned to the lender on salary day and not just 25%. Often rollovers mean that you will be paying financing fees time and again.

6. The cost of a payday loan is steep. Borrowers will pay almost 15USD for every 100 USD borrowed.

7. The APR can be as high as 500% and that too for money borrowed for just 15 odd days.

8. Rolling over a payday loan will lead to high interest payments which may amount to much more than you borrowed in the first place.

9. Often there are many hidden charges and surprises written in fine print that are overlooked by borrowers. This leads to the borrower forking out much more than he bargained for.

10. Payday loans have limitations and only small amounts like USD 500- 1000 can be borrowed.

As a borrower you need to protect your interests. Always take a loan form a reputed and established firm. Never sign up without reading and understanding the fine print. Ensure that the stop- gap loan is paid back in full on payday.

Payday loans are expensive and many experts in finance refer to payday loan companies as “loan sharks.” In case of emergency try and use an overdraft at the bank, available credit on your credit card, or a personal loan from the bank, office, family member, or friend. This will prove safer and cheaper in the long run.

Before you borrow do on online search and establish the credibility of the payday loan company. Check to se if they have any complaints against them. Read through their contract and get them to answer any questions you may have. Ensure that they understand that the whole amount borrowed needs to be recovered from you on salary day and not just 25%. Many companies will take just 25% and roll over the loan charging you fees once again.

Payday loan companies are not fairy godmothers. They are in the lending business purely for profit. So take a payday loan only as a last resort.