www.ArizonaAdvances.com

www.ArizonaAdvances.com

A payday advance or payday loan or paycheck advance is a small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. 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 Advances: How it works
A payday lending store is visited by the borrowers and a small cash loan is secured, with payment due in full at the borrower's next paycheck (usually a two week term). Transactions are associated with finance charges. The borrower writes a postdated check to the lender in the full amount of the loan plus fees. Returning to the store and repaying the loan in person are expected by the lender on the maturity day. Money will be withdrawn traditionally or electronically by the lender, if the borrower doesn't repay the loan in person.

Payday Advances: Controversy and Criticism
The system of payday advances is a controversial practice is subject to legal hassles and public perception challenges the world over.

Money Drainer from low income sectors: People who resort to payday lending are typically low-income group with few assets, who are unable to secure lower-interest-rate forms of credit. Very high interest-rates are charged by Payday lending operations, and savings or asset accumulation are not encouraged by them, thereby contributing to the depletion of assets of low-income communities.

Exploitation for profit: The young and the poor are targeted by the lenders, the high interest rates which are likely to trap them in a "debt-cycle," is not understood by borrowers, who then 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. Compared to the middle class who pay at most 25% or so on their credit cards the poor are unfairly disadvantaged by the payday lending.

Aggressive advertising practices: payday advance lenders use social network websites like 'Facebook' to place adverts - this is against advertising regulations.

Aggressive collection practices: in many cases, the borrower has written a post-dated check to the lender; if the borrower defaults, then this check will bounce. Many borrowers have been threatened by some payday lenders with criminal prosecution, for check fraud.

Ignoring Legal Restrictions: Payday advance lenders have been known to ignore usury limits. And charge higher amounts than they are entitled to by law.

Net profitability: Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability. Regardless of its profitability the practice is condemned by the consumers because it "takes advantage of consumers who are already hard-pressed to pay their debts".