The "Pay Day Loan Agreement" that all payday lenders must provide is a very important document to understand.  US Law requires that certain terms be disclosed in each loan agreement.  When you apply for a loan, make sure you review the loan agreement carefully.  Here's what to look for.

Under the Truth in Lending Act, the cost of the payday loan - like other types of credit - must be disclosed.  As part of a payday loan application process, this is provided by way of a “payday loan” agreement, which you must review and sign.  Among other information, this agreement discloses:

    * The total amount financed (the amount being borrowed)
    * The finance charge
    * The Annual Percentage Rate (APR)
    * The terms of "repayment."

The fee, or finance charge for the loan is the dollar cost of the loan, and includes the dollar cost of all the interest to be paid over the term of the loan and the cost of all charges imposed by the lender.  Typically this is expressed as set fee charged per amount borrowed - say, for every $50 or $100 loaned.  The loan agreement must also express this as an APR, which is the cost of credit on a yearly basis.  This is a complex calculation designed to provide a uniform "true cost of credit" which the borrower can use to comparison shop.  Basically, the APR assumes that the total finance charge (which is equal to the total interest on the debt plus any other charges) is paid in equal installments over the term of the loan and then calculates the amount paid each year as a percentage of the amount financed.