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A payday loan may also be known as a cash advance loan or a post-dated check loan. The way it works is this: an individual writes a personal check for the amount that he’s looking for, plus a fee. The payday loan company then provides the customer with the amount of the check, minus the fee. If the customer opts to roll over the loan for a few more weeks, he or she ends up paying additional fees.

The company providing the loan must give you information in writing about the amounts of any finance charges and the annual percentage rate charged. In essence, a payday loan is credit offered to you at an exorbitant amount. Because of the rollover feature, you could end up paying as much as $30 in finance charges on a loan for $100.

Before taking out a payday or cash advance loan, you should explore all other financial options. For instance, you would be much better off financially if you can borrow the money from a friend or relative at a modest interest rate and pay the amount back over time.

 You might also be able to obtain a personal loan through a credit union at a much lower interest rate. Even if you obtain a cash advance on your credit card, the interest rate might be lower than what you would end up paying on a payday loan.