If you have a bad credit history, then you may have been refused a loan at one time or another by a credit provider. In this situation, one alternative for people with a bad credit record is a payday loan.

Payday loan advertisements appear everywhere, from the Internet, to the newspaper, to pawnshops and check cashing locations. They are sometimes cleverly-worded as a "payday advance" rather than a lone in such advertisements, in order to downplay that they are, in fact, a credit transaction.

The advantages of payday loans are that they can assist a person on the path to repairing their credit, provided that the requisite payments are met on time and the loan is repaid in full. A payday loan is easy to obtain and doesn't always involve collateral. As well, an instant payday loan may be obtained quickly online, sometimes deposited into a bank account within 24 hours. The only items typically required to obtain a payday loan include a pay stub as proof of employment, proof of a checking account, and a postdated check for the loan amount and service fee.

On the downside, a payday loan typically involves a strict and high interest rate, as well as certain conditions that could be lost in the fine print if the borrower fails to read their contract carefully. Restricted fees, maximum terms and advances, and limited rollover allowances are just some of the reasons why groups such as the Federal Trade Commission, Consumers Union, and the Consumer Federation of America have been critical of the payday loan industry.

The payday loan industry and its unregulated growth has also attracted criticism in recent years from the media. The industry's lending practices, which in some cases include interest rates of up to 1000%, have caused many to consider these institutions as predatory, modern-day loan sharks. Despite this, payday loan companies seem to be growing in number, as the troubled economy leaves a large number of borrowers with limited choices in times of cash emergencies.

After carefully weighing the pros and cons of a payday loan, you should take the proper precautions if you decide to obtain one. One method of protecting yourself is through a payment protection plan, which is an inexpensive insurance on the loan that protects the borrower incase they lose their job, become ill, or are injured. Your best payday loan precaution is to only obtain one if absolutely necessary, in cash emergency instances where other resources such as debt consolidation are unavailable.