Offered to borrowers under many names such as paycheck loans, 'til payday loans, and cash advance loans, payday loans have grown rapidly both on and offline across America. They seem to offer a solution for many credit-challenged borrowers that is hard to resist: The ability to get instant access to cash without a credit check. Typically, the only requirement for getting a payday loan is proof of employment and a checking account.

On the plus side, the payday loan is relatively easy and quick to obtain regardless of a borrower's credit situation, as stated above. They are also widely available both online and off. Repaying a payday loan is simple. Typically, you either give the lender a post-dated check that they will cash on the date your loan is due, or they will take the money out of your account electronically with an e-check. Payday lenders have streamlined the process to make it simple and convenient for the consumer.

On the negative side, payday loans are relatively high priced. The fees are typically quoted as costing a certain amount per 100 dollars borrowed. For instance, several lenders charge 25 dollars for each 100 dollars lent to the consumer. If a consumer were to borrow 300 dollars for two weeks at that rate, he would be paying 375 dollars back to the lender when the loan comes due at an annual rate of over 600 percent. At those prices, even the most expensive high interest rate credit card is a bargain. The fees charged vary widely from one lender to the next, so shopping around can save borrowers a considerable amount of money. For example, online you can find payday loans for as little as 10 dollars per 100 dollars borrowed.

Are payday loans a viable financing option for borrowers? The answer lies in your credit rating and your need for the funds. If you can use a credit card, get a personal loan from your bank, or borrow short-term from a relative or friend, those are likely much better options that will cost you less in fees. If you do not have the ability to obtain funds from any of these sources, payday loans might be the only option available. Because of the high cost, use of payday loans should be limited to emergencies only.