payday loans
Short-term emergency borrowing
Payday loans are small, short-term loans designed to tide borrowers over until their next paycheck, typically carrying extremely high interest rates.
The borrower usually writes a postdated check or authorizes automatic withdrawal for the loan amount plus fees.
Critics argue payday loans trap low-income borrowers in cycles of debt, as fees compound when loans are rolled over: She took out a payday loan to cover rent but ended up owing triple the original amount.
- borrowerOne who takes temporarily
- paycheck to paycheckNo savings between wages
- living expensesCost of daily life
- predatory lendingExploitative loan terms
- high interestCostly borrowing fees
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