Payday Loans or cash advances When in financial need with no place to turn to a “payday loan” can come in as a life saver. The pay day loan company gives the person borrowing the money a small short-term loan to cover the borrower’s expenses until the next payday. The down side is that these loans carry a very high percentage rate on the borrowed money, as high as 300%. The payday loans are calculated at a different rate and is compounded daily. Pay day loan companies are not allowed to operate in every state or every country.