Thinking about the person close to the end of the food chain, the concept of payday loans may be one of the best things that has happened since sliced bread. These short term loans provide a safety net for these people, because in most cases, they can't borrow from mainstream banks for reasons ranging from bad or no credit history and rating, to illegal immigration status. These outfits are also easily accessible, and when you go into middle or low income neighborhoods, you find payday loan centers at every other street corner. These loans also come with almost no strings attached. You don't have to put any collateral up. All they ask is that you honor your debt and pay up on time. Payday loans fill up the voids created by banks for people who need small amounts of money at short notice, and probably don't want to hit up friends or relatives for the small financial boost.

PROS

Fast to get – All you need to get a payday loan is walk into one of the centers with a pay stub and a current checking account and you are set. Convenient – To get a payday loan, you don't have to make big plans or appointments with the lender to meet you. If you need it now, you can get it now. Easily accessible – Almost anyone can get a payday loan. They will not discriminate based on your earnings. So long as you work, you're good to go unsecured – Another reason that makes a lot of people favor payday loans is the fact that you don't have to put up anything as collateral or security.

CONS

No security – Because you don't put up any collateral, when your creditors come after you, they can take away things you never thought they could, for example a paycheck

High rates – High interest rates mean high fees for each loan taken out. With time, the fees add up, even when you pay on time. For example, if you take out a loan of $300, you could fork out anything between $45 and $100 in addition to the loan and in the long run it’s not so cheap after all. Addictive – Once people start taking put payday loans, they can end up in a vicious cycle of debt. It's the easy way out, so some people might opt to keep taking loans as opposed to saving for a rainy day.

In the developing world, people are blindly turning to payday loans. This is a relatively new concept brought to them by people who have been exposed to payday loans in developed countries. In developing countries, well to most people, the thought of easy money is very alluring, especially when you think of all the beauracracy, and inconvenience of getting a loan through mainstream lenders. Like with every good thing out there, when things are done without seeking advice from the experts, the long term effect or consequences can be almost disastrous. Consider someone who sees an advertisement in the newspaper for payday loans, but when you get there, the unscrupulous dealer is asking that you surrender your car registration or your land deed, just until you payback the money.

Ask people about pay day loans and they will tell you, and not in so many words, that they are legal loan sharks. They might as well come with guns blazing. When they start hunting you down, they come with guns blazing and woe unto you if you cannot pay up. They might as well be loan sharks who want to break your legs because when people get caught up in the vicious pay day loan cycle, they feel like they have had their legs broken. The threats of repercussions are countless, ranging from taking over your bank accounts, to taking half your paycheck, to reporting you to credit agencies among others. Might this be why people are still using the back street loan sharks? Better the devil you know? In the end they are still providing the same service aren't they?

There has been a rapid decrease of payday lending stores through out the United States while a rapid increase of payday lending in other countries such as Australia, United Kingdom, Sri Lanka, India, South Africa and many others which also include the South American Countries. The reason why payday loans are doing so poorly that is in normal small business owned franchise stores is because people have turned to other sources to get payday loans. With banks all over the country now offering a form of payday loans small payday loans stores have suffered tremendously. Some have also suffered due to the fact of greed with many of them having hidden fees making it hard for the customer to payback the loan and probably ending up in a debt cycle which has seen many of this customers complaining to the governor who in turn has gotten the stores closed down and some even kicked out of the city for good. States like New York have pretty much shut down all stores and states such as North Carolina have closed down the practicing of payday lending and most lenders were told to stop making new loans and collect only the principal amount of the existing loan without any interest and under these same terms where told to pay seven hundred thousand dollars to a non profit organization for relief.