You see, payday loans work just like any other loan vehicles but... with a catch. How payday loans work is easy to understand. The borrower has the choice to apply the loan online, over the phone, or personally at the lender's office. The borrower will be asked for 3 requirements: proof of employment (This varies from company to company. Sometimes the company requires that the borrowers should be regularly employed on a certain period of time at the same job), should be at least 18 years old, and an active savings account. And... Viola! The borrower gets the money he or she requested. The requirements are necessary so that lenders have the assurance that the borrower has the capacity to payback what he or she has borrowed. When the loan is approved, the borrower should issue a post dated check to the lender that will be deposited on the agreed payment date. An attractive offer? So what's the catch? The high interest attached to the loan. Depending on the company, the interest rate ranges from 15% to as much as 50% a week! That means if you borrow $300, you will have to pay $345 to $450 in one week. And if you were unable to pay what you have borrowed plus the interest within a week, do the math. No need to mention that this type of loan will definitely give you a good and lasting financial burden in 2 weeks time.
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| Payday Loans |
The very problem that brings you in the position to borrow a small amount of money to get through the days before your paycheck will snowball into larger and more complex situation you cannot handle. Payday loan, if used incorrectly will give you more debt than before you have acquired the loan.
One big problem with payday loan is the idea that you cannot borrow your way out of debt. But since payday loan is quite attractive seeing that we are only talking hundreds of dollars, many people think that applying for this loan makes good sense and the best move to take. But looking closely with the figures mentioned earlier, you will realize that applying for payday loan is big financial move with a big risk bigger that what you can think of especially if you are living from paycheck to paycheck. If you fall short of your budget, say for 3 days and you borrow money through payday loan, you will certainly survive the days until your next paycheck arrives. But unless you cut your budget down between today and to the next paycheck, you will definitely going to have much bigger financial requirement since you have to pay what you have borrowed plus the interest. Making the both ends meet is almost impossible to do if you have already reduced the length of your ropes.
However, payday loan is not all evil. After all, you will not borrow money unless you badly need it. And when you need emergency money, payday loan is always there to help you. As was mentioned, payday loan is the fastest and the easiest solution to a short term financial problem so when unexpected bills that are out of your budget arrives, when most wanted item on the department store is on sale and you are short of cash, or when your budget falls short, you have the payday loan to go.
Payday loan will definitely help you with your financial requirement especially if it is just a small amount. Payday loan will provide you with sure cash tomorrow or even today, unparallel to any other types of loan vehicles. Payday loan companies will not even care if you have bad credit record. And if you know how to use payday loan properly, you can definitely make the most out of it without problem in the future.