You have probably encountered online payday loan advertisements many times as banners or e-mails. Online payday loans are marketed through e-mail, online search, paid ads, and referrals. How is an online payday loan different from the one you can get at a cash advance outlet? When you apply for a payday loan online there are typically less documents you are required to provide. Some sites even don’t require any documents to be faxed at all. Just you social security number and your checking account. The account is used to deposit the loan after your submission has been approved. So, in a direct way, you don’t get cash as in real-world cash advance services, but the essence here is the same. The fee for the loan are then withdrawn from your account when your payday comes, thus the name “payday loan”.

Most online payday loan services allow you to “flip over” the loan, which means that you extend the due date for an additional fee. In real-world outlets this operation is restricted in some states by the legislation. So an online payday loan gives you an advantage over that. But you have to remember that flipping over your payday loan will result in high APR on the initial amount you have borrowed. So think twice before going with that option – it can come with a pretty hefty price tag.

The Consumer Federation of America has analyzed about 100 Internet payday loan services in terms of rates and amounts of money lent. The study has shown that there are amounts of $200 to $2,500 available as payday loans, while the most popular amount was $500. The rates charged by the services were quite diverse, ranging from $10 to $30 per $100 borrowed. The rate that was the most popular among lenders was $25 per $100, or 650% APR in case the loan is paid off within two weeks.