Because payday loan are short-term loans, there is a very strict usury limit associated with it. Some jurisdictions have few restrictions on lenders. A PayDay loan lender is given a limited APR or Annual Percentage Rate. The difference between the APR and EAR or Effective Annual Rate can still be significant thanks to the short-term nature of this kind of loans. Let’s say you get a $100 PayDay Loan, a $15 charge for a two-week loan is good enough. In the United States, the finance charges for payday loans can range from 15 percent to 30 percent. Borrowers should just be conscious enough to take note whether the APR or EAR is quoted carefully so as to make significant comparisons.
The borrower of a PayDay Loan should be at least eighteen years of age and should be a resident of the country or state where the loan is being applied. Then he should fill out an application form with details including the name, occupation, income, the amount, and purpose of the loan and the latest salary slip. When all the requirements are accomplished, approval of the loan can be within twenty-four hours or less after submission.