A payday loan, or cash advance loan, is a short-term loan with normally no credit check required. With a payday loan you can borrow up to $1,000 to help you deal with any financial emergency. Payday loans are meant to be short-term loans and are designed to be repaid within one or two pay periods. 

Payday loans can be very costly -- they are known as emergency loans for a reason. Borrowers should use them with caution and pay the amount back as soon as possible. These loans are usually priced at a fixed dollar fee, which represents the finance charge to the borrower. Because the loans have such short terms, the cost of borrowing is very high. In return for the loan, the borrower usually provides the lender with a pre-dated check or debit authorization.

Payday loans can be a good tool for quickly and easily borrowing cash during an emergency if you don’t have other financial options. For example, you might use a payday lender for an immediate and temporary financial need such as a medical bill, car repair, or other one-time expense. Payday loans are helpful for people who don’t have credit cards or savings available. Because the loans do not require a credit check, they are easy for people with financial problems to obtain.

However, since the interest rate and fees are generally so high for payday loans, use them only if you have exhausted all other options. It is much cheaper to use a credit card or borrow money, or tap into a savings or money market account if you have one. Also, be careful with the fine print on your payday loan agreement. If you don't follow the instructions to the letter, the payday loan company may end up extending the loan even if you are able to pay it simply because you did not inform the company far enough in advance that you are going to pay off the loan in full. Since the company has your bank account information, it has the discretion to take out fees and costs associated with extending the loan.

So proceed with caution if you are considering a payday loan, and if you get one, pay it off immediately!