The Perils Of Payday Loans

We’ve all seen the commercials on TV or have passed by the ever growing number of store fronts that seem to be popping up on every corner advertising instant payday loans. But what are these loans really all about and are they a good idea?

These types of loans go by so many different names that it can be very confusing to the consumer:

Payday Loans
No Fax Instant Cash Loans
Faxless Cash Loans
Instant Loans

Take your pick, there’s probably a variation of those words on some sign over a loan store right now.

What these loans really are are short term high interest rate loans usually secured by your next paycheck and are intended for emergencies and to be used for short term financial needs only.

The businesses will say that the interest and fees they charge are less than what you would have to pay if you had late charges on your credit card or bounced check fees.

But is this really true? For a typical loan of $100 to $500 you can expect to pay anywhere from $15 to $30 or more for each $100 you borrow and this can add up to an annual rate of over 300%!

No wonder they are so eager to lend you money against your paycheck. They can’t lose. In fact, it’s almost like owning your own casino and explains why there are so many of these stores popping up everywhere.



It’s almost like having a machine to print money!

Now what happens is a person making $300 a week borrows $100 from one of these places and then realizes that in a week or two they are going to have to pay that back from their paycheck. Take out the interest and the week you must pay the loan back leaves you with less than $200 in your pocket to live on.

Since many people need more money than that to survive what do they do? They extend the loan or take out another loan and in effect push the dreaded day of reckoning out further and further all the while making the companies rich.

This viscous circle has trapped many people and once they’re sucked in it can be very hard to get out of the borrowing cycle because they can’t face the day when they have to pay the money back permanently.

Payday loans are a double edged sword. They can provide for a quick fix of emergency cash but you really need to plan ahead for the day when you must pay the money back and use these types of loans responsibly or you too will find yourself stuck in the web.

For more information on instant cash loans visit us at http://www.learnaboutpaydayloans.com/.



Here are some more payday loan articles...