Payday loans, also known as cash advances, are small loans designed to assist short term when a financial emergency happens and your cash is a little bit tight. These cash advances are typically under $500 (but can go as high as $1,500) and are usually paid in a single payment by the borrower’s next payday.

For example, let’s say that you become sick and need a very expensive prescription. Prescriptions aren’t covered by your medical insurance, so you are left to find the means to pay the cost on your own. You don’t have any extra money this week, but next week you’ll have enough leftover to pay for the medication. The problem is that you need the prescription now, not in two week. Instead of making yourself worse, you apply for a cash advance from a payday lender.

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Instead of your credit score, payday lenders across the country use the information from your paycheck [gross and net pay, year-to-date totals (for job stability), etc.] to get the money you need and get it quickly. Some lenders require you to have direct deposit as a cash advance prerequisite.

Many cash advance lenders will ask you to write out a post-dated (personal) check (payable to the lender) for the full amount of the loan, including all applicable fees and finance charges. When your loan becomes due, the lender will simply deposit your personal check and pay off your balance in full while retaining the fees.

Pennsylvania is one of 15 states in the U.S. that considers cash advances along with the rest of the payday loan industry illegal. The state’s “Post-dated Check Cashing” legislation, coupled with an interest rate cap of 23.5% on all small loans prohibits all types of payday loans. No new legislation in pending.

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* Cash-Advance-USA.org provides information and research on cash advances/payday loans. We are not a payday lender or broker, nor are we necessarily affiliated with the companies profiled on this site. Not all products and services are available in each state.