What is a Payday Loan?

So do we dare ask what is a payday loan? By definition a payday loan is a very small and short-term loan consisting of the time frame of one pay period. A pay period can be one week, twice a month, every two weeks, or once a month. Typically the loan is $250 to $350, but range from $150 up to $500 in the United States. Some lenders claim to lend up to $1,500 to $2,500 on average. The payday loans are intended to bridge the borrower's cash flow gap(s) between a single pay period. Many times over payday loans are also often referred to as cash advances, but are not, by definition, a cash advance. The terms of cash advances are to provide immediate cash against a prearranged revolving line of personal credit such as a credit card (revolving credit and not a ATM card). A payday loan is not a revolving line of credit. It is a single pay period extension of credit and it has the ability to be rolled over into a new loan (up to 12 times in most states) or in essence what could be considered a sequential loan. Terms, regulations, and conditions differ from state to state.