The world of credit was wide open to most people just a few years ago. Then the bottom fell out of the world economy and most of those people were left stuck with mountains of debit, late payments and even bankruptcies. Getting credit was not made any easier with the government tightened banking regulations to avoid an even worse recession from irresponsible lending. This means when people need money for emergency expenses, or just to pay a bill and stave off a late payment, getting a non secured loan is next to impossible.
One answer to many people´s problems is pay day loans. Payday loans are simply unsecured loans attached to your paycheck. They are considered unsecured because you are offering up only future collateral, not present tangible property. There are two great things about these loans and one the makes them a bit unattractive. The first thing is that they are fast and require no credit check. If you have a job and a bank account and are at least 18 years old, you will qualify for one of these loans. The second great thing is that because you are paying them completely off each payday you get more points on your credit score. You get points for securing the loan, points for making the payment, and points for paying off the loan. Using these loans to pay off smaller creditors will also increase your points because you are eliminating creditors by turning them into credit sources.
The bad thing about these loans is the cost. The Annual Percentage Rate (APR) is used to base the interest rates on traditional loans. Payday loans however can be as much as 10% higher than traditional loans, nearly 25%, which means that if you borrow $1000 you will owe an additional $250 on your next payday.