What's the deal with payday loans?

I am starting this blog from the perspective of a lender in the business for 15 years. I see too many articles and news stories about the ill effects of payday loans and never see anything about the positives. I am not writing this to tout payday loans, only to learn from users and other lenders of the pruduct. I understand and agree with with a number of complaints about the product.
1. Is it another mechanism to put you deeper in debt?
The answer is yes and no....if not used correctly, then yes. If it is necessary to get a payday loan then get only 1 maybe 2 tops. If you find yourself needing a third then you will get yourself into trouble and eventually spiral deeper into debt. The purpose of the loan is to alleviate some overdraft fees, credit card fees, or to pay for an emergency. You should pay it off in one lump sum if possible and not extend or "rollover" the loan. Most companies, like mine, will automatically extend or "rollover" the payday loan for another pay period. READ your contract and make sure you choose to pay it off on your next pay date or at least pay the finance fee plus part of the principal.

2. Where else can you get a loan for under $500?
The answer is nowhere if you can't borrow it from a friend or family member. Banks will not take the time to fund a loan for so little as it is not worth it to them. They'd end up losing money. That is why Payday Loans evolved.

3. Do all payday companies operate the same ?
No. Some will automatically pay off your loan in full immediately on your next pay date while others will just debit the minimum finance fee. Either way is beneficial, but again, read your contract and make yourself aware of the payment programs and options available to you. Believe me, payday companies want you to pay off the loan and not bounce a payment.

4. Does my state allow such loans?
some do and some don't. Always contact your state's banking commission to see if it is allowed. Do not take out a loan, find out they aren't legal in your state, then complain to the lender. You applied for the loan, accepted the terms, signed a contract. You can close your checking account etc...and refuse to pay but believe me your credit will be compromised in the future.

5. How do all these payday companies get my application?
9 times out of 10 when you apply online you are not applying with a direct lender. You are submitting your information to a company that will "find a lender for you." Most times when you search for Payday Loans or any derivative of them on Google, Yahoo, and other search engines the results will be servicers and not lenders. Make sure the company you are apllying with is the lender. The sevicers sell you information, which you allow them to do, to lenders. I myself purchase "leads" from servicers as that is where the majoity of consumers apply. If they are a sefvicer it will usually be displayed at the bottom of their application page....read.

6. Why do they charge so much?
Fees range from $8 per $100 borrowed to $35 per $100...or 8% to 35% per pay period. Be aware of the lowerpriced ones as they often will "suck" you in with the low fee and if you don't pay in full on your first due date their fee increases. Anywhere from 25 to 30% is fair. That may sound high...it is. The reason is the huge amount of fraud. Banks used to indirectly fund Payday loans up until July 2005 when the FDIC limited the amount they can charge to a maximum of 3% per month. There are no more banks in the industry as the reduced fee aloowable would not allow them to make a profit due to the abundance of fraud.

7. Is ther a difference between an internet Payday Loan or walking into a store front?
No, it is your preferance. The internet offers ease while the walk-in store allows for face to face relationships.