Payday Loans in the USA

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The short-term loan (also known as the Payday Loan or cash advance) is an unsecured loan borrowed over a short term with a high interest rate in the USA.[1] The payday loan is typically settled upon the borrower’s next payday. Cash advances can be obtained through a line of credit or a payday loan provider. To receive approval for a payday cash advance, the applicant must be 18 years of age or older, provide proof of employment, proof of residence, and details of an active bank account. In the United States, regulation governing the issue of payday loans differs between states.

A payday loan can range from $50 to $1000 [2]. The online cash advance is issued in accordance with the earnings or salary of the borrower. Cash advances can be obtained through a brick and mortar lender or through an online lender. To facilitate a loan application, the lender will request the paycheck or proof of salary from the borrower. Total earnings serve as the principle for the borrowed sum and lending rates. A borrower’s credit score can have a direct impact on the success of a payday loan application.

A bad credit loan is a payday loan with high interest rates and a short repayment period compared to the typical cash advance. The bad credit loan is an unsecured loan issued by a payday lender to applicants with a negative credit history[3]. The bad credit lender is issued the loan based on proof of income and affordability

The interest charged by a payday lender can reach 500% in its APR (Annual Percentage Yield). In the United States, usury laws have restricted the charge of interest to below 35% [4]. According to the Federal Truth in Lending Act, payday providers in the USA are required to exercise transparency when issuing rates and loan charges.


  1. Kagan, Julia. "Payday Loan Definition", Investopedia , USA, 15 July 2019. Retrieved on 27 January 2020.
  2. Johnson, Creola.http://www."Payday Loans: Shrewd Business or Predatory Lending"], [ University of Minnesota Law School , Minnesota, 2002. Retrieved on 27 January 2020.
  3. Merrit, Jessica. "Bad Credit Loans", U.S. News ,US, 2 January 2020. Retrieved on 27 January 2020.
  4. Kagan, Julia. "Payday Loan Definition", Investopedia , USA, 15 July 2019. Retrieved on 27 January 2020.

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