A Payday loan (also called a Payday advance) is a small, short-term, loan secured against a customer's next pay check. The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Pay day advance loans rely on the consumer having previous payroll and employment records. Legislation regarding payday loans varies widely between different countries and, within the USA, between different states.
Payday loans carry substantial risk to the lender; they have a default rate of 10-20%, and according to one study, defaults cost payday lenders around a quarter of their annual revenue.
Payday loans in Canada are limited by usury laws, with any rate of interest charged above 60% per annum considered criminal according to the Criminal Code of Canada. In addition, the provinces of British Columbia and Saskatchewan have imposed specific regulations on payday loans, including lower interest rate caps. what are payday loans
what are payday loans