Why you should never enter a payday loan store!
Payday loans are a small, short-term loan that is granted to borrowers to cover expenses (mostly intended for emergency situations) until they receive the next paychecks. The borrower must repay the total amount of the loan plus fees, most of the time, at a very high interest rate. The lender may process the check traditionally or through electronic withdrawal from the borrower’s checking account.
It is commonly called as “cash advance”.
If you’re thinking of applying for a payday loan, have a break. Think twice, and consider the following disadvantages to help you decide.
High interest rate. Typically, payday store charges $25 for every $100 borrowed. This is because, there’s no collateral (like credit check) required.
Delays. Some payday store deposits the money right into the borrower’s checking account, thus causing some delays for the withdrawal of the money. This is not good for emergency situations.
You must repay the full borrowed amount for a span of 1 month. This will let you sacrifice your budget for other needs. Most borrowers can’t repay the full amount in a month. The tendency is they extend the term. Leaving them the option of just paying the interest every month, thus causing more problems in paying off their debt.
You can’t ask for a specific amount. The payday store decides how much they will grant depending on your monthly income, checking account transactions and other variables. The amount you get might not be what you’re looking for.
Fraud issues. This is especially applicable to the online payday loans. They will hook the borrower with their impressive – looking website. Borrowers, not knowing of the hidden charges, might get in a deeper debt because of these scam companies. Thus, extra precautions are advised when dealing with online payday stores.
Having an emergency fund is the best answer to avoid getting into payday stores. Right budgeting is the key to have a debit-free life. Start saving now and have a peaceful mind, not worrying of unexpected expenses you might encounter in the future.
