Payday Loans are of the Devil!

February 16, 2007

payday_loans_kh.jpg

Ok, well maybe not, but they still are a very bad deal. Here’s an excerpt from another great financial blog creditpro:

“Another common problem that I encounter on a daily basis has to do with payday loans. While these may appear to be a quick and easy way to get money for rent, bills, credit cards, etc., the first loan is simply the start of a cycle where you are continually further and further behind on your payments and in need of even more money. Before you know what has happened, you are left in a downward spiral of overwhelming debt.

In most instances, my clients only need a few hundred dollars to pay their bills, so they head over to a cash advance store and put up their future paycheck in return for a no credit check loan. However, things start to get a little sticky when you discover that this place is charging an exorbitant interest rate, sometimes as much as 25% for a two week advance. To put this into perspective, if you borrow a rather modest $200, you could end paying upwards of $50 for this “quick and painless” loan. And once you have paid off your bills and repaid the loan, you may see that you are still a little short on cash due to the unexpected interest payment, so you need to take out another loan. Well, there goes another $50 dollars, meaning you just paid $100 in interest for a one month loan of $400.

Although throwing away $100 a month will not affect the livelihood of most individuals, the people who are taking out these cash advance loans are usually making minimum wage and working hard to make ends meet. It may appear that these operations are taking advantage of the low-income earners plight, but the government has said payday loan stores are not predatory and fulfill a crucial role for some people. I wholeheartedly disagree with this considering that I have seen first hand how it can destroy a family’s life.”


**Sponsored by:

National Payday suggests that all payday loans be used on a short-term basis only. Because payday loans are for small amounts and due on your very next payday, they should be based solely on need and urgency and should not be taken out for extended periods. It’s in your best interest to pay these loans off in full, or more than the minimum when extending.

Advertising does not constitute endorsement by Christian Finance Blog.

Advertisements

One Response to “Payday Loans are of the Devil!”

  1. Dev Says:

    Payday loans can be a bad loan if you don’t pay back on time. Otherwise if you pay back on time, there is nothing to worry about.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: