Payday lenders and their customers have been all over the news for
good reason – most people just don't realize quite what they are getting
themselves into. The problem has become such a financial epidemic that
some states have started to outlaw payday lenders, or at the very least
put laws on the books which make it nearly impossible for payday lenders
to operate. Ask any financial advisor and they will strongly recommend
against getting a payday loan too. All of this begs the question – are
payday loans just as bad as everyone says?
The Quick Road to Debt
The general consensus is payday loans should be avoided at all costs.
Payday lenders are not required to be licensed, bonded, or regulated by some of the
most important laws providing consumer protection. Furthermore, the
terms of the loan, and conditions under which most people resort to such
loans, create a family-size recipe for disaster. If you pay the loan
back on time (usually one or two pay periods), all you have to sacrifice
is a pretty hefty fee. However, it is when you don't pay up that really
costs. With APRs ranging anywhere from 400% to 5,000%, one payday loan
for just a couple hundred dollars could easily become several thousand
in just a few months. Even worse, these loans seem to target those which
are most likely to default and end up with insurmountable debt.
Video: Payday loans can become long-term traps
Who Uses Payday Loans?
Anyone with a checking account and regular job can get a payday loan
without a credit check. Since there is no credit check, such loans are
most appealing to consumers with little to no credit, and thus very few
alternative options for fixing their financial pitfall – such as credit
cards, savings accounts, or assets of any kind. So when a consumer does
default on a payday loan, their only option for paying their debt is to
either get another payday loan or declare bankruptcy, because with
interest rates like the ones mentioned before, there is no hope of
catching up.
Video: Understanding the way Payday Loan stores
work
Should You Get a Payday Loan?
There are certain circumstances where a
payday loan could be useful – such as an unexpected bill or very
temporary hardship. Don't borrow more than you can definitely spare next
week, and don't even borrow if you can negotiate the bill, pay less in a
late fee than you would on the loan fees, or use your bank's overdraft
protection to get the cash you need. If those are not viable options,
bite the bullet and ask a friend or relative for the cash, or get a line
of credit from an
FDIC-approved lender or
other similar traditional small loans. At the very least, if you
absolutely must opt for a payday loan, shop around for a reputable
payday lender with a good rate, and make repayment your number one
priority when you do get your paycheck. Once this emergency passes, it
is definitely a good idea to make sure it doesn't happen again by saving
two months worth of expenses, or at a minimum, one paycheck, as an
emergency fund.
More Resources:
Check into Cash Advance Payday Loans
(877) 262-2274
The Cash Store
(800) 965-8963
Lighthouse Financial Group Of Tennessee Inc.
(800) 639-2274
Check City
(804) 782-2274
B G Loan & Jewelry Co
(562) 927-7296
Paycheck Loans
(303) 442-8882
Quick Cash Funding
(714) 535-9388
All Checks Check Cashing
(323) 735-6410
Payless Loans
(805) 683-6633
Check Cash Northwest
(503) 968-1010
Fast Check Cashing
(818) 996-2274
Check Masters
(877) 627-8377
DTS Financial Debt Settlement Company
(866) 432-1466
Payday lenders and their customers have been all over the news for
good reason – most people just don't realize quite what they are getting
themselves into. The problem has become such a financial epidemic that
some states have started to outlaw payday lenders, or at the very least
put laws on the books which make it nearly impossible for payday lenders
to operate. Ask any financial advisor and they will strongly recommend
against getting a