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A payday loan (also called a paycheck advance or payday advance) is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. Credit Cards

Typical payday loans are between $100 and $500, on a two-week term and have interest rates in the range of 390 percent to 780 percent (APR). 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.

Payday loans in Canada

According to the Canadian Criminal Code, any rate of interest charged above 60% per annum is considered criminal. On August 14, 2006, the Supreme Court of British Columbia issued its decision in a class action lawsuit against A OK Payday Loans.

A OK Payday Loans charged its customers 21% interest, as well as a "processing" fee of C$9.50 for every $50.00 borrowed. In addition a "deferral" fee of $25.00 for every $100.00 was charged if a customer wanted to delay payment. The judge ruled that the processing and deferral fees were interest, and that A OK was charging its customers a criminal rate of interest. Do not call lists | About Financing

The payout as a result of this decision is expected to be several million dollars. The British Columbia Court of Appeal unanimously affirmed this decision.  Federal legislation passed in the spring of 2007 transferred regulatory authority on payday loans to the provinces.

Critics blame payday lenders for exploiting people's financial hardship for profit. They say lenders target the young and the poor, particularly those near military bases and in low-income communities. They also say that borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," where they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Critics also say that payday lending unfairly disadvantages the poor, compared to the middle class who pay at most 25% or so on their credit cards.

However, supporters argue that some individuals that require the use of payday loans have already exhausted or ruined any other alternatives. Payday lenders argue that a bank's overdraft fees, which often are $25 or more per instance, can be much more costly than the $15-30 per hundred dollars borrowed from a lender.

By law, a payday lender can use only the same industry standard collection practices used to collect other debts.

In many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Some payday lenders have therefore threatened delinquent borrowers with criminal prosecution, for check fraud. This practice is illegal in many jurisdictions and has resulted in regulatory action.

PAYDAYLOANS.CA and PAYDAYLOAN.CA are payday loan sites