Payday Loans: The Hard Truth About Easy Money November 18, 2016My MoneyOff

As you’ve probably figured out by now, life isn’t a bed of roses, and is full of all kinds of unpleasant surprises that come when we need them least. When a massive expense gets dropped on your head, and you find yourself in desperate need of easy money, it can be easy to clutch at any solutions that present themselves. These are the times where people commonly opt for payday loans. Though they may seem like a viable option, there are various dangers that come with these loans. Here are some of the big ones everyone needs to be aware of.

High Interest
This is among the biggest risks associated with payday loans. Even those companies that boast about their low interest rates come with a catch, for example putting a cap on the amount you’re allowed to borrow in order to get that low interest. By and large, you’re going to be charged at least $15 for every $100 you borrow. Before you call up a payday lender, do some maths and make absolutely sure that you can afford what they’re charging. These interest rates can quickly pile on the charges, driving people further and further into debt, and causing them to reach out to consolidation services like this: https://realpdlhelp.com/ . Although these companies may make it feel like they’re you’re only option, remember there are almost always better alternatives!

Short Loan Periods
One of the things that appeals to so many people about payday loans is that the money is placed in your account almost immediately. However, this is something of a double-edged sword. Part of this means that you’ll be expected to repay the loan very promptly, plus fees! If you’re late, then the charges will rack up more and more, with the risk of you having to pay double what you borrowed! This will not only be very difficult to keep up with, but can completely decimate your credit score too. If you’re set on a payday loan, work out how much it will cost you overall, and consider the dent it’s going to make in your next paycheck.

Low Income Makes Lenders Drool
Because payday loans don’t follow traditional credit checks, it’s pretty common for payday lenders to prey on low-income individuals and families. They’re essentially getting their paycheck early – free money, right? Though it might seem innocent on the surface, the risks of payday loans almost always outweigh the perceived convenience. You may get the cash with minimal hassle, but you’ll almost never have the option to pay it off in increments – most lenders expecting the loan to be paid back in one lump sum. It’s not difficult to see how people on low income can quickly get stuck in a vicious cycle of borrowing and paying back. If you go for a payday loan, you’ll not only be screwing yourself over, you’ll also be supporting an industry that preys on the people who need it least.

Photo by Docent | Shutterstock

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