Payday Loans

Financial emergencies are the worst. Everyone has been there, and there is no stress like it. Money trouble can cause fights at home and lots of sleepless nights, making your desperate for a cure. That is when quick fix ideas start sounding pretty good, like credit card cash advances and high interest payday loans. Don’t be fooled. If you exercise one of these options, like a payday loan, you may be trading a short term fix for a lot of long term heartache. In fact, you could destroy your credit and get into debt your really can’t get out of. Before you start thinking about that cash advance payday loan as your life preserver, realize it is more like grabbing a concrete block while you’re trying to swim.

What Is So Bad About Payday Loans?

Think about all of these companies that offer payday loans and their promises. “No fax payday loans!” “Instant cash advances!” “Payday loans with no credit check!” Why do you think these companies are so generous that they would make getting money so easy for people who generally have such a hard time getting if from traditional lenders? They’re not doing it to help people in need – that is for sure. If you look at the rates for a typical payday loan, what might sound like a small fee – say, $50 or so – actually represents a triple digit rate of interest when you compare it to the principle. Would you get a mortgage with a 650% interest rate? Of course not! But many customers end up paying that much at a payday loan company. According to one expert, the average instance cash advance customer takes a loan for $325 and ends up paying $793 before it is all said and done. How does the price go up so much? The reason is because most people can’t pay off the loan when it is due.

When you can’t pay your loan, whether it was a $1,000 payday loan or a $200 payday loan, the loan company helpfully rolls your debt over – and adds on more fees. So when you can’t pay that amount the next pay day, it gets rolled over again, and so on and so forth. Before you know it, you’re up to your eyeballs in debt trying to get out from under a loan that was supposed to last for four weeks, tops. Payday loan companies are also known for their strong arm collection tactics when you default on a payday loan. These loans aren’t an answer – they’re just one step further into the hole.