Despite your best efforts, you find yourself in a little bit of a financial bind because of a medical emergency in your family. Even though you have plenty of equity in your home, it doesn’t really make sense to use a home equity line of credit to payoff a $500 medical bill. So what can someone do?

You might want to consider a “Payday” loan to solve temporary, short-term financial obligations.

What are Payday Cash Advance Loans?

These loans are geared toward assisting consumers that need to obtain several hundred or even several thousands of dollars due to an unexpected cost. In essence, consumers pledge their paycheck as collateral.

How Do Payday Cash Advances Work?

• You fill out an application and provide the lender with items such as paycheck stubs and a photo ID.

• You sign a loan agreement, write a postdated check to the lender, and receive your money.

• Your check is held until your loan payment is due - usually two weeks. The lender then deposits your check - unless you have replaced the check or have already repaid the loan.

Once the paperwork has been processed, there are a few obligations you’ve made as a consumer. Consider, for instance, that the loan documents you sign legally obligate you to repay the loan on or before the due date. If you do not repay the loan in full, you are in violation of your contract and the lender can seek monetary compensation that can include any NSF (non-sufficient funds) charges and/or attorney fees. A lender can also list your delinquent payment history with the credit bureaus, which may make it more difficult to obtain a loan next time.

While a payday loan might not be part of the long-term financial plan for consumers, they definitely can fill the need during a short-term financial crunch.