A payday loan is a small, unsecured, high interest, short-term cash loan. In most cases, consumers write a post-dated, personal check for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it, or the customer returns with cash to reclaim the check.
If You Decide to Get a Payday Loan, Shop Wisely!
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Contact the Department of Financial Institutions to verify that you are dealing with a licensed lender.
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Comparison shop for the lowest fees and penalties. For example, some credit unions offer payday loans with lower fees.
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Borrow only as much as you can afford to repay with your next paycheck.
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Know when your payment is due and be sure to repay the loan on time and in full.
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Avoid borrowing from more than one lender at a time.
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Plan for the future by making a realistic budget to help avoid the need to borrow for emergencies and unforeseen expenses.
Think a Payday Loan is the Answer? Consider Your Options!
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Ask about delaying or making payment arrangements on your non-interest bills like telephone and utility bills.
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Ask to borrow money from a friend or family member.
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Ask your employer for an advance on your paycheck.
You Should Know!
Although a payday loan may be a convenient short-term solution, it is inappropriate for long-term cash needs. Borrowers can get trapped in a payday loan cycle of debt by taking out loan after loan – sometimes called “rolling over” the loan.
Know Your Rights and the Law!
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You have the right to change your mind about the loan within one day.
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You have the right to know all of the costs involved.
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You have the right to a payment plan.
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A payday lender may not threaten criminal prosecution as a method of collecting a past due loan.
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Paying off an old loan with a new loan may be illegal.
