Payday loans are a type of short-term borrowing, in which an independent small-credit merchant gives you an immediate loan against your next paycheck—kind of an advance on your wages. If they don't need all that much money (these loans are often capped at around $500) many borrowers look at payday loans as ideal because the lenders don’t typically check credit scores or history, and the money is instantaneous. While the loan principal is small, APRs on payday loans are upwards of 400%. No, we didn't leave out a decimal point. They're 400%. To add insult to injury, there are often various little fees as well. You can easily end up paying much more on a payday loan than you originally borrowed. If you can get a small personal loan from a credit union, especially one of those that offer three-digit loans, you’ll save a lot more money in interest compared to payday loans. Plus, you'll have months, even years to repay, in contrast to having to cough up by your next payday.