Payday loans are a type of personal loan offered by a variety of institutions all over the world and in the digital arena. The premise of payday loans is that they usually offer fairly small loan amounts and require one to payback the debt in a short space of time which is sometimes prescribed as the debtors next payday. Payday loans also may require the debtor to give the institution access to their account in order for the loan to come in the form of a once-off debit order on the agreed upon date.
Payday loans have increased in popularity although they are not free of controversy. One of the most controversial aspect of most payday loans is the steep hike in interest rate if the debtor is unable to pay back the loan on the agreed upon date. However, after expert investigation it has been appreciated that most companies offering payday loans do not have higher interest rates than other institutions so long as the lender is able to pay when they had agreed to.
There are a variety of institutions that have been closed down after investigations into their lending practices. It has been noted that most users of payday loans are usually those with bad credit and relatively small incomes which means that greedy lending practices on the part of payday lenders put the lenders at a great disadvantage.