Need some extra cash to get you through until your next paycheck? Payday loans are there to help. But you should be ready to pay the price, which is usually high. But there are things you can do to keep your money from getting hurt as much.
What are Loans Until Payday?
Cash advance loans, post-dated check loans, and deferred deposit check loans are all short-term loans with high-interest rates. Most of us get paid every two weeks, so most short-term loans are for 14 days or less.
What's the deal with a Payday Loan?
The idea of living from paycheck to paycheck came from the old economy. Even though that was bad enough. In the economy we have now, many people don't make it to their next paycheck. So, the person who wants to borrow writes a check for the amount she wants to borrow plus a fee. The check is made out to the lender.
The lender deposits the check and, of course, keeps the fee. This type of loan should give the borrower some breathing room, and the borrower should be able to pay back the loan when he or she gets paid.
Let's look at a good example. Ms. Susan Borrower wants to borrow $200, but it will cost her $30. She writes a check for $230, and the payday lender agrees to hold the check until her next payday, which is usually 14 days away.
Depending on the plan, after 14 days Ms. Borrower gives the lender $230 in cash and gets back the personal check she wrote. Or, she can pay a fee to "roll over" the check and get another two weeks on the loan. When she rolls the check-over, she will have to pay a fee, which in this case was $30. In theory, if she rolls the check over for a year, she will pay $30 26 times, which is $780 for a $200 loan.
How is the fee for a payday loan worked out?
Most of the time, lenders charge a fixed fee for every dollar they lend. For example, you might have to pay $10 for every $100 you borrow, and you might have to pay as much as $30 per $100 you borrow. Oh, no! Twice the pain! This means that the interest rate is about 700% per year, and some people are worried about the 20% interest rate on their credit cards.
What can you do with the Truth in Lending Act?
Under the Truth in Lending Act, payday loan lenders must tell you how much they cost. So find ways to compare them. You must get, in writing, the finance charge (in dollars) and the annual percentage rate (APR), among other things (the cost of credit on a yearly basis).
What should you have as a back-up?
Your own check is the security for the loan. Going back to when your word was your bond. But since many people break their promises as easily as they break their bonds, lenders make these loans very, very expensive so that those who do pay can cover the cost of collecting from those who don't.
What can you do instead of getting a payday loan?
Call your credit union or small loan company and ask if they can help you out in the short term. I know it can be hard to tell friends and family about your money problems, but you should swallow a little of your pride and ask for help. Just be careful not to let your pride get in the way of paying them on time.
Why not just ask your creditors for more time to pay your bills if you are borrowing money to pay off other debts or bills? Find out how much they will charge for that service, including late fees, extra finance charges, or a higher rate of interest.
What can you do to cut down on the cost?
If you need credit, be careful when you shop. Look at the offers. Find the credit offer that has the lowest APR.
Compare the annual percentage rate (APR) and the finance charge (which includes loan fees, interest, and other costs of credit) of different credit offers to find the one with the lowest cost.
Some companies will guarantee the lowest price, which saves you time when comparing prices. This kind of guarantee is shown by: "Must be a real offer from a real online payday loan company that can be checked. Offers that are only good once are not included. A 14-day loan of less than $500 must be used to compare rates."
How to treat the problem, not just the signs?
Start meditating and praying, and I don't mean asking God or your higher power for money over and over again. I mean, take the time to get to know your higher Self, which can help you look at life in a more balanced way. This information can help you get a handle on your feelings, which are often the main cause of out-of-control spending and emotional spending binges. Who knows, you might even be able to talk to God directly and get more than just your money in order.
Remember that the outside world is just a reflection of what's going on inside us, and we can't change the outside world until we change how we think.
Most of the time, people need money because they don't make enough money and don't spend it wisely. Start by getting a better education if you want to make more money. Try to get a better education and learn new skills that will help you get better jobs that pay more. I know it's hard to have enough energy to study after working 50 to 60 hours a week. But wouldn't you rather have short-term stress from studying for a better future than long-term stress from payday loans?
Also, with the Internet, you may be able to start a small business that you couldn't do before.
Look closely at how your money was spent over the last six months. If something keeps coming up, it's no longer a one-time deal. Make a budget that really shows how much you spend each month and each day.
Contact your local consumer credit counseling service if you need help coming up with a plan to pay off your debts or make a budget. In every state, there are non-profit groups that help people with their credit. You can get these services for little money or even for free. Also, ask your employer, credit union, or housing authority about credit counseling programs that are free or cost little money.
Lastly, if you decide you need a payday loan, don't take out more than you can pay back with your next paycheck and still have enough money to get you to the next one.
So, what's good about this payday loan?
With new companies offering this service every day and thousands of people using them and even vouching for their benefits, I have to admit that there are some benefits.
First of all, Payday Loans are often the only fast way to get out of a tight financial situation. It's easy to meet the requirements. You can find out quickly whether something is true or not, and you can do it online. Most of the time, there are no credit checks. Some lenders won't even ask you to fax them proof of your income. Your question is kept secret. You can get the money as soon as the next business day.
