Below you’ll find definitions on all things payday loan. And there are a lot of them! To help you find what you need, use the following alphabet to jump to the correct section.

Notice that some are red? That’s a good thing; it means there are no terms in that section that you need to know.




Annual percentage rate (APR) – Also known as interest rate, APR is the new money owed on a loan, represented as a percentage of the outstanding loan balance. Payday loans typically have extremely high APR’s so they can make a profit off a short term loan.

Auto title loans – A type of secured loan (see below) that uses a borrower’s car as collateral. To get the loan, you have to hand over the title to the car, either to the lender or a third party, and if you fail to repay the loan, the lender gets the car.

Jump to Top



Bounced check – When a check is deposited, but there aren’t sufficient funds in the associated account to pay for it. Also known as overdrawing the account, this typically results in extra fees to the writer of the check.

Jump to Top



Cash advance loan – Another name for a payday loan, typically specializes in giving a loan in cash and requires payment at the borrower’s next paycheck.

Check advance loan – Another name for a payday loan, typically gives the loan in the form of a check and requires payment at the borrower’s next paycheck.

Check fraud – When somebody writes a check with the intention of it not going through (bouncing), it counts as check fraud. If you write a post dated check to pay off a payday loan and it bounces, the lender can sue for check fraud.

Collateral – Some kind of item of similar or greater value than a loan amount, that is used as security for payment. If the person who owes money fails to pay off their debt, the collateral becomes the property of the lender as payment.

CollectionsWhen a debtor fails to pay their loans, it is sent to either a different part of the business or to a third party in charge of trying to collect the money.

Compound interest – When interest is produced off of the principle of the loan, it is added to the lump sum of money owed and further interest is accrued off of the total amount of money now owed. (See Simple Interest)

Credit check – typically, lenders review a person’s credit score to see their borrowing and payment history before issuing a loan. Most payday lenders don’t do a credit check.

Jump to Top



Debt – When money is borrowed from and owed to another person or business. Typically debt is accrued when someone needs to make a purchase they don’t currently have the funds for.

Debt collection – The process of debt collection can include many unpleasant tactics. This can include: threats to send information about the loan to credit unions to hurt your credit score, calling a phone number at all times of the day and night, sending collectors to your home to bother you, legal threats, attempts at wage garnishment, informing your employer you owe money, and

Default – Not paying off a loan for an extended period of time, or giving up altogether on trying to repay a loan.

Deferred deposit – A check that is written and dated for a day in the future and cannot be deposited until then. (See Post dated check)

Direct deposit – Many payday lenders will deposit the loan directly into a borrower’s bank account instead of providing a check or cash.

Direct payday lender – A person or business who can provide a payday loan straight to a borrower, without having to go through multiple organizations, banks, or other businesses.

Jump to Top



Electronic transfer – Moving of funds between sources electronically. Payday lenders can deposit the loan directly into a bank account and could be paid back through online methods.

Jump to Top



Federal Deposit Insurance Corporation (FDIC) – An organization that promotes trust in the U.S. financial system by insuring bank deposits. The FDIC examines and supervises multiple financial institutions, which are considered “members.”

Jump to Top


Loan – Money that is borrowed under an agreement (typically a contract) to pay it back, usually including interest and other fees

Loan fees – Additional charges outside of interest added to the initial amount of the loan. This can include transaction fees, late fees, money transfer fees and more.

Loan shark – Somebody who gives out loans with high interest rates illegally.

Long term payday loan installments – A plan set up by a payday lender for people to pay off the loan overtime, typically resulting in larger amounts of interest, as there is more time for interest to accrue.

Jump to Top


Maturity date – The final payment date of a loan. For payday loans, this is typically when the next paycheck will come in, usually within two to four weeks.

Maximum loan amount – The maximum amount of money a person can be loaned. Factors many payday lenders look at include how much money a person makes in a single paycheck, other expenses they have to pay for, and any collateral that is offered.

Military consumer protections – Servicemen, veterans, and their families have additional borrower protections when taking out a payday loan. Depending on the state, this can include a set APR, how much money can be lent out, and being unable to take out a loan right before being deployed to active service.

Moneylender – Somebody who lends money with interest in order to make a profit. Can be an individual or an organization such as a bank.

Jump to Top



Payday fee – Receiving a payday loan often comes with a small fee that has to be paid, either when first getting the loan or added to the total amount needed to be paid off.

Payday installment loans – A plan to pay off a payday loan that is larger than a typical paycheck or because interest has grown too large.

Payday lender – A business that provides short term and payday loans.

Payday loan – A short term, small loan where the lender provides money up front for the borrower under an agreement that when the borrower receives their next paycheck, they will pay back the loan plus fees and interest.

Post dated check – A check written to be deposited at a future date. Often used as a form of security to pay off a payday loan after the borrower’s next paycheck. Typically is larger than the loan amount to cover interest and fees.

Post dated loan – Another name for a payday loan. Requires a post dated check in order to receive a short term loan.

Predatory loans – Loans designed to be difficult to pay off and trap people in a cycle of debt. Typically have high interest rates and additional fees, and are considered to specifically target borrowers who are unlikely to be able to make payments on time or sufficient to fully repay the loan.

PrincipalThe initial amount of a loan borrowed. The principal for a payday loan is smaller than other loans, but have much higher interest rates.

Proof of income – Evidence that the person looking for a loan has a stable income. This can include a job, social security, or disability. (see also Verification of employment)

Jump to Top


Risk based pricing – When the APR or principal amount on the loan is adjusted because the borrower asking for a loan is deemed a high risk of not paying it off.

Jump to Top


Secured loan – A loan that is based on collateral property (such as a car), which is surrendered to the lender if the debt cannot be paid.

Short term loan – A loan that is designed to be paid off quickly, typically over the period of a few weeks or months.

Simple interest – Interest that is gained only off of the principal loan amount and not on the interest already grown plus the initial loan. (See Compound interest)

Specialized consumer reporting agencies – An organization that keeps track of people who have outstanding payday loans. Payday lenders subscribe to the service so they don’t give out a loan to somebody who already has one with another business.

Jump to Top


Text payday loan – A way to be approved and receive a payday loan over text message. Requires contacting the service, providing the necessary information and getting a direct deposit into your bank account.

Jump to Top


Uniform Small Loan Law (USLL)Laws set up to protect consumers from dangerous loans. Controls how high an APR a loan can have and how large of a loan a small loan lender can give.

Unsecured loan – A loan that is given based on a person’s creditworthiness and not based on a form of collateral.

Usury Laws – Laws set up by the state or local government to limit how high an APR on certain types of loans can be set.

Jump to Top


Verification of employment – Proof that the person requesting a loan has stable employment and income by which they can pay off the loan. Typically a pay stub or proof of employment letter. A standard requirement for a payday loan (see Proof of income)

Jump to Top


Wage garnishment – An amount of money pulled directly from a borrower’s paycheck as mandated by a court. If a person with a payday loan fails to fully pay it off in time and is then sued by the lender or sent to a collections agency, a possible solution might be wage garnishment.

Jump to Top

This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as This compensation may impact how and where links appear on this site.  This site does not include all financial companies or all available financial offers. Learn more in our Earnings Disclaimer.
Get a FREE Credit Evaluation from Credit Saint Today!