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A payday loan is a loan made for a short time. Sometimes only two weeks. To get a payday loan, you give the lender a personal check for the amount you want to borrow, plus whatever fee the lender charges you. The lender gives you cash, minus the fee. On your next payday, you have to pay the lender the amount you borrowed plus the fee, in cash.

Payday loans can be very expensive. Here’s an example:

You want to borrow $500. The fee is $75. You give the lender a check for $575.
The lender gives you $500 in cash. He keeps your check.
When it’s time to repay the lender, often in two weeks, you pay him $575. The lender gives you back your check.
The bottom line: You paid $75 to borrow $500 for two weeks.