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Most consumer advocates consider payday loans a variation of predatory lending. Proponents of payday loans say that these types of loans fulfill a need. Whichever side of the debate a person may fall in, the fact is that many people across the country are accessing payday loans without knowing exactly how they work or what they are about.

Here are ten things that any potential borrowers of payday loans should know before taking out a payday loan:

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1. The most important thing that potential borrowers should keep in mind when considering taking a payday loan: PAYDAY LENDING IS NOT CHARITY. Payday lending is a lending business and the lenders are not in it to help the borrower out of a tight spot. Default on a loan and they will call and call and call to get their money.

2. Potential borrowers should look up their state's laws on payday lending to know their rights and limitations. The National Conference of State Legislatures has a reference table available. Another good site to review is PayDay Loan Consumer Info's State Information page. Even if the potential borrower still wants or needs to borrow the money, if the borrower has a better idea of which payday lender is operating in compliance with their state's laws then the borrower will know who and what to look out for in a possible lender.

3. Payday loans are short term loans that operate on the premise that the borrower will pay back the amount on the next payday. Borrowers need to be aware if they cannot pay the amount in full by next payday, then they should look for another alternative.

4. Due to the highly unregulated nature of payday lending, payday lenders might stretch the limits of the interest to the point that they are skirting on the legal limits of usury laws and the borrower may not even know that they are paying far more in interest than is legally allowed.

5. Loan documents may include the Truth-in-Lending (disclosure of interest and APR) but may omit such basics as the disclosure of lender's business location. This is very important since the loan documents may state that the Governing Law is the lender's home state rather than the borrower's. If the borrower does not know the lender's home state, then it often leaves the borrower unsure of which governing law to refer to if there are questions. Again, keep in mind that payday lenders are not lending money as a charity to the borrower. They are lending money to make money so the less the borrower knows, the better

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