The Hidden Dangers of Payday Loans
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It sounds like the ideal answer, you know that the money is coming in the form of your pay-check and your
loan will be able to tide you over until you are paid. At this time you will pay back the lender, generally via a
post-dated check. What could be simpler?
Payday loans are also referred to as cash advance loans, check advance loans and deferred deposit check
loans.
The downside to a payday loan is that rates of interest on this type of loan are generally comparatively high.
The lender will either charge a fee or a percentage of the amount borrowed. Like all other types of credit, the
cost of a payday loan must be disclosed to the borrower in writing. The finance charge should be disclosed
in dollar value along with the annual percentage rate or APR.
When you look at this information, you will realize that this sort of credit is indeed a very expensive way to go.
For example, you may wish to borrow $100 and write the lender a check for $115 to be cashed in say 14 day's
time when you are next paid. In this case, the finance charge on the loan is $15 which doesn't sound too bad.
However the APR is equivalent to 391% which is extortionate. If you continue to roll the loan over which many
lenders will allow you to do, the finance charge will rise accordingly.
If you need cash urgently, it is wise to consider your options. Assuming that you are employed, there are
certainly better choices available. You should look around for the credit offer with the lowest APR. Perhaps
you could look at a small personal loan from your bank or credit union, an advance from your employer or a
loan from friends or family. You may also want to consider a cash advance on a credit card although that may
incur a higher interest rate than the other options mentioned.
It may help to look at the reason why you need a short term loan. Is it because of poor budgeting and not
saving any of your income? If this is the case, it may be wise to work out a debt repayment plan with your
creditors and work on developing a budget. There are a number of free or low-cost credit counseling
programs who will work with you to put together a budget.
Although a payday loan can seem like an easy and convenient option, it is important to realize that it is an
option with serious downsides. If you do decide to go this route, borrow only as much as you can afford to pay
back with your next pay check and make sure that there is enough left in that pay check to get you through
until next payday.
You know your finances aren't in the shape you want them to be. You don't have a stash of emergency funds
socked away. You're living from paycheck to paycheck… but then your car dies. You need a few hundred
dollars, fast, and you don't have it.
Enter the payday lender. In increasing numbers in the United States, these lenders are advancing money to
borrowers in just such a dilemma -- and they're charging several arms and legs in the process.
According to the Center for Responsible Lending (CRL), payday lending -- only one of many kinds of
"predatory lending" -- sucks $3.4 billion a year out of consumers and communities. Asserting that "the payday
lending business model is designed to keep borrowers in debt, not to provide one-time assistance during a
time of financial need," the CRL cites data showing that 91% of payday lending goes to borrowers who take
out five or more loans per year. Only 1% of such loans go to one-time borrowers with emergencies.
A CRL example illustrates the dynamic: "A borrower writes a $300 check dated two weeks in the future to a
payday loan company and takes home $255 in cash after the $45 in fees charged ($15 per $100 borrowed).
In two weeks, the loan is due in full, but most borrowers cannot afford to pay the loan back and still make it to
the next payday." To avoid defaulting, they end up repeatedly paying $45 every two weeks -- all for a $255
advance.
Other characteristics of predatory payday lenders include the lack of an installment-payment option to help
the borrower pay down debt, an annual percentage rate of several hundred percent (yes, you read that right),
and no evaluation of the borrower's financial condition and ability to repay.
Fortunately, there's some good news for people in a bind. Some credit unions have stepped up to offer a
more consumer-friendly alternative in the form of "salary advance loan" programs. Members can borrow up to
$250 (later $500, if they exhibit good repayment habits) for a month, paying no more than an annual interest
rate of 18%, which amounts to about $3 in a month. Generally, there's also an annual fee of around $35 to
use the program.
Whether you're living from paycheck to paycheck or are looking to buy a $400,000 house, don't be a sucker for
predatory lenders. Get informed, and you'll end up with much more bang for your bucks.
Need extra cash till payday? It's easy to apply and be approved for an online loan till payday. If you are in need
of 100 dollars to 1000 dollars or more, getting a loan till payday has never been easier. Online payday
advance companies can approve your payday loan in minutes and you can have the cash you so desperately
need in your checking account in a short period of time.
Sometimes the need for extra cash arises when you least expect it. Repairs to your home or automobile,
medical or other emergencies, and simply running low on cash several days to a week or more before your
next pay check are some of the reasons people need a loan till payday. Applying for and being approved for a
payday advance is quick and easy thanks to the convenience of the internet. Online payday loan companies
are offering cheap rates and up to 30 days to repay. By answering a few simple questions, supplying your
employment and banking information, and perhaps faxing a few documents, you can be approved and have
your cash as soon as the same day you apply.
Getting a loan till payday is a painless process that can help you solve your immediate financial needs. With
up to 30 days to repay your loan, the terms offered by online payday loan companies have never been easier.
A quick application and you are done. Your personal information is verified and you are approved for your
loan. It's as simple as that. Cheap rates and easy repayment terms make getting a loan till payday an easy
process. Most of the time you can be approved for a loan till payday without having to fax any documents at all.
Search and compare online payday advance companies and find the best rates and terms possible. A loan
till payday can be yours in as little as 5 minutes. Approval is fast and you may have the option of extending
your loan as many as 30 days if need be. Cheap online payday loans can be the answer to your immediate
needs and can be repaid in convenient installments. Apply today and have from $100 to $1000 or more in
your checking account tomorrow. Some payday advance companies can deposit the cash you need into your
account the very same day you apply. A quick, simple application is all you need to receive a loan till your next
payday.
With cash advance payday loans, there is no credit check. So, even if you have bad credit, you can still get
approved. The loan is based on your employment verification.
