A payday loan is an unsecured, short-term cash advance that is repaid by borrowers on or before their next payday. These loans are taken by borrowers to meet unexpected expenses. Though they have a high interest rate, many people prefer these loans because the application process is fairly simple and the funds are released within 48-72 hours. Payday loan applications are processed quickly and do not require a detailed evaluation by the lender.

Though payday loan applications are simple and easy, the application procedures tend to vary slightly from one lending body to another. Most lenders approve an application if the applicant has a checking account, which is at least 90 days old, is employed with a company for a minimum period and has a monthly net income of a predetermined amount. Payday loans applications are approved within 24 hours and the funds are transferred to the borrowers checking account on the next business day. Borrowers are usually asked whether they will make the full and final payments on the due date. In most cases, the loan payment is taken by a direct debit transaction on the due date.

When a payday loan application is approved, the lending institution will take a check from the borrower as a security for its payment. The check has to be made out to an amount that is equal to the sum of the borrowed amount and the interest accumulated on it. On the due date, the borrower may pay the due money through a different mode and retain the check or ask the borrower to cash it in. If the borrower wants to proceed with another payday loan application, then the accrued interest is usually paid and the loan amount is carried forward.

Payday loan companies have been witnessing an increasing number of applications, over the last few years. This is a pointer to its popularity as a loan product. Studies have revealed that many borrowers key in multiple applications for payday loans.