 TITLE: How to Avoid Payday Loans CONTENT: What Is a Payday Loan?\n----------------------\nA payday loan is a short-term loan provided by lenders outside of the traditional banking space. These loans are typically $500 or less and have terms of two to four weeks, or until your next payday. While many states regulate payday loan terms, you can expect to pay $10 to $30 per every $100 borrowed—or 400% or more in interest based on the annual percentage rate (APR), according to the Consumer Federation of America.\nPayday loan regulations vary by state, with some states even banning them entirely. Payday lenders don't usually require a credit check or proof that the borrower has the means to pay back the loan. These loans commonly are rolled over or reborrowed if the borrower can't pay the amount back as agreed—resulting in even higher borrowing costs.\nBorrowers who seek out payday loans may be from underbanked communities or may have limited access to other financial tools that provide better financial options. According to the Consumer Financial Protection Bureau (CFPB), payday loan borrowers are concentrated among women, Black and Hispanic consumers, low-income consumers, those with a high school education or less, and consumers 40 to 61 years old. The CFPB notes that 60% of those who use alternative financing (specifically payday loans, title loans and pawn loans) report being turned down for mainstream financing or not approved for the amount needed.\nDespite their easy access, payday loans can result in a cycle of costly debt for borrowers. END