It seems like everywhere you look someone is wanting you to give you a loan. The ad’s make it look like Payday loans are affordable fast cash options. When in reality that couldn’t be further from the truth! How much do payday loans cost? If you’re in a pinch will they help you or make your situation worse?
What’s A Payday Loan?
A payday loan is a very high-interest rate loan. You usually get it at “store front” and not through a bank. It’s usually pushed towards people who have no other option and need the money fast or people who have bad credit.
They don’t require credit checks all that is required is a job and a check. The borrower writes a check out to the company for the amount borrowed and the fee for borrowing. The company holds that check until you get paid. Then either you go back in and pay your loan off or the cash your check.
When you get a loan you usually have two weeks to pay it back. That’s how the companies get you. It becomes a borrowing cycle. You pay the loan back, but then have to reborrow because You are broke from paying back the loans with most if not all of your paycheck. They get you into this cycle and while you’re struggling to get out of it, they are profiting big time from all the interest your paying.
Every time you roll your loan over, re-borrow, or extend your loan. How do you get out? Read your contract. In some payday loans, there is a clause in the contract that allows you to ask for extra time to pay usually 30 days. In writing ask for that time. Use those 30 days to make payments in increments
If you are considering or already have a payday loan read the contract. Make sure you understand everything in it from what happens if you default to how much the entire loan will cost you. Make sure you also look for hidden fees you wouldn’t think they would charge you for paying your loan off early but some do.
If you don’t understand the contract or don’t like the terms DO NOT SIGN. Also, if the person working changes or tells you something that isn’t in the contract to get you to sign DO NOT DO IT. When you sign the contract what they said doesn’t matter The only thing that matters is what is in black and white. You’re stuck to that contract even if you were promised something else.
Avoiding Payday Loans
Payday Loans are bad news. Any way you slice them they are just way to expensive. The companies charge insane amounts of interest. The loans they make have an average APR of 300%, but some charge as much as 5,000% interest. They should be avoided like the plague.
- Budget– I can’t say it enough a budget can and will help you get your finances on track. You are going to find yourself in these ruts until you have a sensible budget in place. You have to tell your money where to go, and to do that you have a sensible, balanced budget.
- A small loan- If you must have cash look around for cheaper options. Your much more likely to get a cheaper loan through your bank of a credit union.
- Credit Card- Using you credit card might be cheaper. Look at your interest rates and see if that’s the case.
- Sale Stuff- Sale stuff around your home to get extra money. Every extra penny you make is less you have to put on a credit card or less you have to borrow.
The bottom line is a payday loan is way to expensive. If there is any way around it, you should never get one.A payday loan is a high-interest loan roller coaster that’s is just ways to hard to get off.
What’s your thoughts on Paydays loans?