Generally, a payday loan is an agreement to lend an individual some money they’ll agree to pay in installments or in full once they get their next income. Payday loans have a higher cost of borrowing than most loans like cash advance because of their unsecured nature. Since the payday loan is not reliant on any assets of the borrower, the online lender assumes a lot of risks. To compensate for this risk, payday lenders have to charge a higher interest rate.