Under the Truth in Lending Act, the cost of payday loans, like other types of credit, must be disclosed to the borrower. Other pieces of relevant information that you must receive in writing include the finance charge or the dollar amount and the annual percentage rate or APR. The APR refers to the cost of credit on a yearly basis. -------------------------------------------------------------------------------- Fast Cash, High Rates A payday loan, which is a cash advance loan secured by a personal check, is a very expensive source of credit. But despite this, many people still opt for payday loans. To explain to you just how expensive payday loans can be, let's say that you need to borrow $100 and so you write a check for $115 which would pay your loan for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check. You then redeem the check by paying the $115 in cash. If you can't make the payment, you can also roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the lender charges you $15 as fee and at the same time, the loan costs you 391 percent