Payday loans are small, short-term loans made by check cashing businesses or similar companies at very high interest rates. Usually, the borrower will write a personal check in the amount of something like $100 to $300, plus a fee payable to the lender.
The borrower and lender enter into a contract wherein the lender agrees to hold the check until the borrower's payday, at which time the lender will deposit the check. That is where the name "payday loan" comes from. The borrower gets a quick cash loan, at an up-front fee of something like $15 for every $100 borrowed.
