Payday loans which are also called paycheck advances, cash advance loans, or check advance loans are short term loans that are offered for approximately one to four weeks. The name payday loan is the result of people borrowing on the promise of a payback on their payday. However, these loans are usually last-resort loans for people who have run out of other options and these loans have numerous disadvantages. Here are some drawbacks of payday loans which are notorious for their nefarious and predatory lending practices.

• Interest rates
  The interest rates on payday loans are very high and can range from 300% to a staggering 1000%. Compared to other sources of credit, these payday loans charge almost ten times the interest charged by banks and credit cards. Therefore the interest rate on payday loans is the biggest drawback for a borrower who may end up paying a lot more than he or she borrowed.
• Roll-over trap
  Payday loans are made or structured in such a manner that if a person does not have enough to payback on a predetermined date then the loan can be rolled over or extended. This means that not only is the borrower paying a large interest rate over a longer period; he or she also has to shell out for fees which are charged for rolling over the loan. Therefore rolling over of a payday loan is not advisable.
• Predatory lending
  Payday loans have been called as predatory by the Department of Defense in the United States and a cap or limit has been imposed on the interest charged on payday loans which are forwarded to defense personnel. These loans are generally offered or sought out by people who do not have any other source of credit and are trying to make ends meet. Payday lenders take advantage of this financial weakness in order to exploit people by trapping them in a vicious debt cycle.
• Aggressive collection practices
• Payday lenders usually employ cunning and aggressive collection practices which may harm you financially in an irrecoverable manner. Sometimes payday lenders require the borrower to write a postdated check in order to enforce payment on that day. The check may bounce if funds are insufficient and the borrower may end up paying an overdraft fee or some other contrived charges by the payday lender. Therefore it is advisable to look for other sources for short term financing instead of opting for payday loans.

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