No one wants to live from paycheck to paycheck, but it happens when we don’t plan ahead. Without well-stocked financial reserves, many of us are caught with nowhere to turn when unforeseen expenses crop up. Most people in this situation turn to credit cards or payday loans as a way of getting through the rough spots, but using high-interest credit also has its drawbacks. The interest you’ll pay on high-interest unsecured debt is extremely high. If you didn’t think you could make it before – without this extra cost – how will you make it over the next financial hurdle?
The answer, of course, is to plan ahead and live on a budget. These are not sexy, glamorous, or new strategies for getting ahead in life. You won’t see ads for budget planning on late-night TV infomercials. No hot celebrities will be touting the benefits of planning for the future. It’s not a get-rich-quick scheme. In fact, most people think budgeting is pretty boring.
If you use your imagination, though, you might think about how much safer you will feel with money in the bank, or how much you will be able to save on interest when you don’t have to turn to high-interest lenders for help in the lean …
With so much press about high risk payday loans being a form of subprime lending, or articles saying that payday lenders are targeting the poor and elderly, you might get the wrong idea about payday loan consumers. They’re not necessarily old, poor, or uneducated. Many are hard-working middle-class Americans who simply struggle sometimes living paycheck to paycheck.
After the credit crunch zapped most borrowers in the midst of the worst recession we’ve seen in almost a century, the reality is that people make use of credit when and where they can find it. Using credit has become standard in our society as a way of getting ahead. Overusing credit, however, has also become standard for too many of us, who break out the plastic to buy things we simply can’t afford, hoping that we’ll be able to keep up by making minimum payments.
As PersonalMoneyStore.com recently shared on its website, the average payday loan customer might surprise you. Their average customer was stable, having lived at the same address for three years and worked at the same company for six, they were in their mid- to late-thirties, and many of them were homeowners.
So where does all this concern over consumer protection come from? The main problem with $1.500 payday loans is the …
“Yeah, right,” you’re thinking. Who’d want to get into debt fast? Well, thousands of people go to payday lenders every month and do exactly that. They have an emergency need for cash, and don’t know where to turn. All those television ads and radio commercials made it sound easy – and it is – easy to get into debt, that is.
Payday loans are small, short-term personal loans usually secured by a post-dated check or ACH withdrawal from a personal checking account. All that’s needed in most cases is a copy of your most recent paystub, and you can get payday loans fast either in person or online.
Although they are often marketed as a cash advance, payday loans are not as simple as that. If you got a cash advance directly from your employer, for example (something that almost never happens anymore, unless you are lucky enough to work for a friend or family member) he or she would simply pay you a little bit early. There would be nothing to pay back, because it’s money you’ve already earned, or will earn.
With a payday loan, you’ll have to pay back the original loan amount, plus interest. “That sounds reasonable enough,” you’re thinking. While it’s true that paying back the principal plus …
Payday loans are short term loans offered without a credit check. Pretty much anyone with a job and a checking account can obtain a payday loan. In some cases, the job may even be optional.
The procedure is simple. Go to a payday loan store (there are many franchises to choose from), fill out an application and in minutes, you have cash in hand. Then, when you get your paycheck, you come in, pay back your loan, with interest, and are done with it.
The danger of habit
It sounds easy. And in some ways, it is. The problem is, if we’re not very careful, taking out payday loans to cover daily needs can become a chronic habit. The fact that the loans are so easy to take out is, in the long run, a big part of the problem.
When taking out a payday loan, most people catch the fact that the interest rates are high right off the bat. The advertised rates vary from place to place, often based on how much money you borrow, but they average between 10% and 15% in most cases. And unfortunately, the advertised rates are a bit deceiving.
Interest rates are key
When you take out a bank loan, you are given …
Ours is a sick world. There are people out there just waiting to take advantage of you when you’re in the worst possible shape. These people are the worst kind of scum, with no moral compass and very little in the way of real humanity.
One of the times you’re most vulnerable is when you’re in need of a payday loan. Generally speaking, you’re not in the best financial condition when you’re taking out a payday loan. You are in danger of being taken advantage of or even outright deceived when you’re desperate for cash.
Internet payday loans are especially dangerous. Yes, there are legitimate payday lenders online, and they’re definitely worth checking out when you need the cash and can’t get it somewhere else. But there are some important things that you need to be watching for, including:
- Privacy and security. To be able to apply for an Internet payday loan, you’re sending the company your personal information. Usually this will include personally identifying information like your Social Security number and/or driver’s license number, as well as your bank’s account number and routing number. In some cases, you’re sending these over unsecure links.
- Identity theft and fraud. When you’re disclosing personal information and opening your privacy like that, you’re exposing yourself to
Payday loans can be a real pain in the behind. You take one out to meet an immediate financial need, but by the time payday rolls around there isn’t enough cash in the old checking account to cover it. So, you wind up taking another payday loan, and then another, and then another. In fact, the average consumer does at least three of these before she pays it off. By that time, she’s paid a bunch of money in interest.
The best choice, of course, is to either wait until you have the cash or borrow money from somewhere else. That’s not always an option, though. There are times when you can’t wait, or when borrowing from friends and family isn’t possible.
So, if you have to do it, here are some things you should keep in mind so that your payday loan doesn’t wind up biting you in the end:
- Only borrow what you need and when you need it. Payday loans aren’t for taking out that girl you met at the bar last night. They’re for fixing your car when you can’t get to work. Don’t take out money from a payday lender in order to buy the latest Justin Bieber album.
- Choose a reputable payday lender. Yes, we know. It