You've seen them in every city in almost every state. Payday Loan stores. Successful? You bet. Want to know why? The success of any business is possible because of there being a need for the product or service. Payday loans have received a lot of bad press, are seen as predatory lenders, and target folks who can least afford the loans. The interest rate is purposely inflated to an annual rate to bring shock value to readers who are drawn in to a story.

Payday loans are short term. They have a high interest rate because they are breaking down the loan in days and weeks...not years! Many times, the loan payback is 1% per day of the loan amount. For example, a 100.00 dollar loan for two weeks, with an interest rate of .365 annually, would cost you 14.00 for two weeks! Think about it. One dollar per day for two weeks. Try bounce protection at your local bank and see how much it cost you! Better yet, figure out the percentage of bounce protection, then, stretch that out to and annual percentage rate and see if you don't come up with something like 1200 % APR.

The banking industry hates payday loans because they cut into their profits. Big banks have the bucks to promote false and misleading advertising against payday lenders, where most payday lenders are small companies, although, there are several chain lenders.

Now, lets say you have a loan of 500.00. The payday lender is holding your check and you don't have the funds to cover it the day it's due to be deposited. What can you do?

Contact the lender before its due! Don't wait until its too late. Explain the situation and ask about being placed in bad debt! Basically what bad debt is, it's a program where the lender keeps the check beyond the day it was due to be presented. Upon a mutually agreed schedule, you will make payments, with no additional interest, until the check is paid off.

Here is the bad news! Some lenders will simply say this is not possible and if they don't listen to you and your problem, NEVER use that lender again. There are too many out there. This is a good question to ask before you even take out a loan with a payday lender. What are my options should I have a problem and cannot pay back on the due date? A lender should offer a back up plan or a solution. If they value you as a customer, they can do something. The key to cooperation is communication. This cannot be stressed enough. Most people who owe money and cannot repay, suddenly act as those their lips are hermetically sealed. Talk to that lender and explain your situation.

If you try to communicate as stated above and you get the cold shoulder or no cooperation, then consider the business deal with them a life lesson learned. Find another lender to do business with!

Finally, know your responsibilities when it comes to borrowing money. Know the terms and conditions before you grab your money and go out the door.