If you have ever found yourself in a position where you need more cash on hand, you might have felt tempted to utilize a payday loan. Payday loans are small cash loans you can secure ahead of your paycheck, as long as you agree to repay the loan once you receive your next paycheck.
As you might expect, these loans are not free, and the interest rates and fees sometimes associated with them can prove astronomically high. So, before you sign on the dotted line and secure a payday loan, consider the downsides associated with doing so.
Problems with payday loans
The first problem with payday loans is they come with extremely high interest rates. You can expect to pay somewhere between about 15 and 30 percent of the amount you borrow from a payday loan provider to take advantage of the service. If you are already struggling to make ends meet, the high interest amount can plunge you even deeper into debt, and if you are late on repaying the loan, you may get hit with other fees, in addition to interest.
Payday loan providers also sometimes prey on neighborhoods where many people are struggling financially. They know that those who struggle to pay bills and get by are more likely to have trouble repaying the loans, which in turn leads to more money for them, thanks to interest and late fees. It also might mean payday loan users have to take out yet another payday loan to pay back the first one, and this can create a vicious cycle. There is no limit on the number of times you can secure such a loan, so many people find themselves in a hole that keeps growing deeper and deeper.
In short, there is a high price to pay for payday loans, and they sometimes hurt people in need more than help them. Before you apply for one, see if there are alternative options that may better suit your needs.
Disclaimer - Attorney Advertising. Under Federal Law, we have been designated a Debt Relief Agency and we help people file for bankruptcy relief under the Bankruptcy Code. This information is not intended as legal advice and no attorney-client relationship is created. Results may vary. Results not guaranteed. Dramatization - not actual clients in pictures and videos. Thomas C. McBride,attorney in Alexandria, LA.