Tuesday, December 13, 2011

Payday Loans


 In this economy, a 750 credit score may get you a decent loan by the skin of your teeth.  If you are facing financial difficulties with poor credit, you may be thinking of a payday loan.  I am not here to bash these loans at all. My goal is to make sure you understand what you are getting yourself in to. I take a personal issue with these loans, as a very dear friend had a terrible experience with them, which took her months to resolve.  Just hearing her story prompted me to educate myself on what these loans are and how they work. I would first like you to view these loans as an absolute last resort.  Lay pride aside and ask a family member for a loan.  If there's no luck there, try selling items around your home or even pawning those items.   E-Bay is a great way to make money.  Now, if all of these said efforts fail, then you can look at payday loans.  Please understand that these loans are just what they say they are: PAY DAY LOANS.  In theory, they are advertised as a short-term loan extended to you until your next payday.  At that time, you are expected to pay the money back plus the fees set by the company.  If you are unable to pay the loan back in full, it generally rolls over until you're next pay day, but at a huge price.  Fees and interest rates continue to accumulate, resulting in you eventually owing more than the initial loan amount you took out. For example, a $200 loan that is not paid back on your next payday could cost you $500 if you extend that loan until the next month.  Interest can be as high as 1000%, in which you could easily pay your initial $200 loan several times over with repeated extensions. I could not believe this was legal. Through research I learned that these predatory loans are illegal in many states, including my state of Georgia; however, many companies may continue to operate in prohibited states online.  It is my opinion that in an emergency, these loans are sometimes a necessary evil if you have a TRUE emergency and absolutely no other options. If you absolutely, positively must go to these loan sharks, the key to these loans is to only take what you can afford to pay back on your next pay day.  If not and you continue to roll these loans over each month, you may be in for more trouble than you had for needing the money in the first place.  In summary, save for a rainy day if possible.  If you choose to use these loans, prepare to pay back immediately and avoid the vicious cycle which could easily slide you into much deeper trouble.  Feel free to comment or share your story and remember: "When You Know Better, You Do Better!"