Small and short term loans are given out by payday loan lenders against proof of job security, paycheck that gets deposited into the bank account directly, or by verifying the documents. The payday loan money lenders can be an organization where the borrower is employed or government licensed chit funds or an individual.

The lenders lend the money to the borrower against the paycheck that will be deposited into the borrowers account on payday. This is normally every two weeks so the money loaned is for a period of two weeks usually. The legislation vary from country to country but the norm remains that the borrower has to repay the lender on payday when the check is deposited into the borrowers account. The lender has to verify the employment records proof and payroll in order to ensure that the borrowed amount will be repaid back to him and he does not go into a loss by having to write off the debt.

A loan is defined as the amount of money that is borrowed from a lender and the borrower is bound to return that amount in a particular time frame. The money maybe paid back either in one installment or at regular intervals as maybe decided between the lender and the borrower. If the bank is the lender and the amount loaned is big then it can be repaid by the borrower in installments. In case the borrower fails to pay back an installment then the bank charges interest on that amount and compounds it. This compounded amount maybe more than the principal amount borrowed. It is advisable to repay the amount on time always.

There are many advantages to take a loan from payday loan lenders. Life throws surprises at any time which may require urgent money to tide over that surprise/crisis. Immediate money is required and only a payday lender can meet this requirement. All the borrower has to do is submit the bank documents by email or fax and funds are released overnight. Whereas banks takes days to process a loan before they release it. The loan from the payday lender is a short term loan and has to be paid back with the next paycheck.

Most of the payday loan lenders do business online as well for the convenience of the borrowers. Simply scan and email the documents. These documents are verified by the lender and the money is transferred to the account within twenty four hours. The finance charges are withdrawn and the loaned amount is to be repaid on the next payday. One has to beware of a few payday lenders who maybe touts. Government and authentic sources declare that some of these lenders do not verify incomes so be cautious when applying for a loan online.

It is very important to keep in mind that payday loans are short term loans and should be borrowed only in case of emergency as they carry a very high interest rate.