what is a payday loan 
payday loans are short term high interest loans based on your income the principal of the loan is generally equal to a part of your upcoming paycheck 1 payday loans take advantage of the borrower s need for immediate credit by charging a higher than normal interest rate before taking out a payday loan learn your options such as emergency loans investopedia michela buttignolunderstanding a payday loanpayday loans function as unsecured credit as they do not require any collateral they are often considered a form of predatory lending due to their extremely high interest rates hidden fees and the lack of concern on the lender s part regarding whether the borrower can pay back the loan or not 2because of these high costs payday loans often end up being a debt trap for many consumers who find it impossible to claw back out of the burden of debt they ve accumulated from these loans before taking out a payday loan consider other options such as safer personal loan alternatives 