| Payday loans are short-term loans that are quite easy | | | | borrowers are tempted to allow their loans to 'roll over'. |
| to get as long as you can show the lender your pay | | | | The result is a loan amount that might continue to |
| stub and issue a postdated check, usually dated a | | | | balloon unless the borrower has enough cash to pay it |
| month after the date the loan is released. A credit | | | | off at once.5. Payday loans are risky because they |
| check is not even required in order to get | | | | are designed to be accessible to low-income |
| approval.Payday loans are attractive emergency | | | | borrowers who would otherwise not be approved for |
| solutions for a temporary cash crunch, but they can be | | | | other loans. Lenders do not take into account that |
| risky especially to inexperienced borrowers or those | | | | people who already have cash flow problems might |
| with little control over their cash flow. Fees that may | | | | have even more trouble paying the loan back6. Some |
| seem low and affordable can swell into a big amount | | | | payday loan sites are known to automatically 'roll over' |
| in a matter of months. Some loans have an APR that | | | | a loan and then just withdraw the renewal fee on the |
| can go from 300% to as high as 600%!Payday loans | | | | due date. There are also some sites that require |
| aren't totally bad, but they can easily get out of control. | | | | borrowers to agree to a contract not to file for |
| On hone hand they do provide a temporary solution, | | | | bankruptcy or join class action suits against the lender. |
| but on the other hand there are high risks involved and | | | | The borrower, in effect, protects the lender.7. The |
| at times, the risks can outweigh the benefits.Here are | | | | borrower can get used to payday loans when they |
| seven tips about why you should think twice about | | | | are supposed to be his last option -- when there is |
| getting a payday loan:1. What the borrower receives is | | | | nothing else that can be tapped for money source. |
| actually lower than the amount that's written on his | | | | Because of their availability and easy approval, payday |
| check. The lender will deduct a finance charge from | | | | loans can be very difficult to resist.If you do feel you |
| the loan amount as his profit, usually $15 to $50 per | | | | need to make a loan against your pay, make sure you |
| $100 during the agreed-upon loan term. Sometimes the | | | | are well informed and aware of the potential risks. If |
| borrower writes a check with the loan amount plus | | | | you can, get the lowest possible rate and discuss all |
| fees. If the borrower cannot comply, he will have to | | | | the fees covered by the loan so you know exactly |
| pay more finance charges.2. The borrower might not | | | | how much you are going to get and how much you |
| have enough funds in his account to cover the check | | | | are going to pay and when.If you are already in some |
| he issued. When the loan is due and the borrower | | | | trouble due to payday loans, seek the help of certain |
| cannot pay, the lender usually encourages him to 'roll' | | | | organizations that offer free or low-cost assistance in |
| or renew the loan. He will now shoulder a new loan | | | | helping negotiate and reduce interest charges and |
| with an additional finance charge and late fees, | | | | lower your monthly payments. Try to improve also |
| resulting to a bigger loan amount. The borrower may | | | | your budget-handling skills in order to minimize or |
| even end up using loaned money to pay the high | | | | eradicate altogether the need to turn to loans to cover |
| fees.3. There are state regulations that cover payday | | | | some expenses.Payday loans are quite attractive |
| loans, setting the loan term limit at 30 days, but lenders | | | | short-term solutions to immediate money problems, but |
| avoid this by issuing loans that are no less than 31 | | | | if you aren't careful, it can turn into a long term liability |
| days. Therefore, the borrower is still at the lender's | | | | that will let you sink deeper into a vicious debt cycle. |
| mercy.4. Payday loans are supposed to be turned to | | | | The only way to lower the risk of a payday loan is to |
| only when there is an emergency need for cash which | | | | ensure that you have enough funds to cover it when |
| means that a borrower should be able to pay it back | | | | the pay date comes and to pay responsibly and on |
| immediately, but this is often not the case. Because it | | | | time, just like you do with every other loan. |
| would seem convenient and cheap in the beginning, | | | | |