During a routine car check-up, a service attendant announces to you that it will take $500 to repair your car. Normally, this cost wouldn't be a big deal, but this month you had to pay your income taxes, and you took a hit. To make matters worse, you're supposed to go on a road trip in a week. Where are you going to get $500 in time to get the car fixed?

You decide to head down to the place on the corner that advertises "Quick Cash Now." You've walked by it a hundred times but never had cause to go inside. You decide to give it a try. It's so easy! You're out the door in 15 minutes, and $500 will be deposited in your account sometime the next day. Sure, it cost you $50 in fees, but nothing beats that convenience, right?

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We could all use a little extra money. A payday loan could provide that money -- but it'll cost you.


That convenience is a $40 billion-per-year industry in the United States [source: Kirchoff]. This is the industry of payday lending, and it's served by more than 22,000 locations nationwide.

Booming Industry
In 2000, quick-cash companies in Washington State issued 1.8 million loans totaling $580 million. In 2004, with a large increase in the number of lending companies and locations, these numbers grew to 3.3 million loans totaling $1.2 billion [source: State of Washington].


In this article, we'll learn about the purpose of payday loans, as well as the drawbacks of these quick-cash offers.