What’s a payday loan and why is it hated

Question

I know what loans are but what makes them so much worse?

Edit: thank you everyone for Answering! I think I got it now 🙂

In: 32

Answer 1

Generally, short term loans usually only intended to be carried until the borrower’s next paycheck.

Problem is that they tend to be inherently predatory since someone who has no other way of borrowing funds likely is in a position where they can’t pay back that amount the next week or so, and may end up with little choice but to roll the unpaid balance into another payday loan

The interest/fees often charged on these kinds of loans, if expressed annually, often will be well above 100% APR: someone routinely carrying debt from these kinds of loans will be paying huge amounts of interest over time, creating a cycle that can be *very* difficult to escape.