If you’re anything like the rest of us, you’ve probably hit a rough spot or two in the road. What do you do when you’ve got rough credit (or no credit established) and life knocks the wind out of you? Hopefully, you get back up and keep fighting, but how? When you can’t get to work because your car has broken down and you have no way to fix it, and you don’t have enough money to pay the mechanic, your options are limited. Enter payday loans.
Like a friend who has your back, a payday loan can be a life saver. Not only are they available to people with credit problems, but they’re available fast. Most of the time, with just proof of income and residence, you can sign a few forms and walk away with up to 60% of your average paycheck in cold, hard, green cash. In some states, you can even take out payday loans with more than one lender, so you can actually get more than your average paycheck on short notice and with little more than your autograph.
Here’s the thing, though. You have to be careful. If you don’t pay your payday loans off right away, they can end up costing you a lot of money. The interest rate is usually between 9 and 14 percent, which is a lot higher than bank loans, or even most credit cards. Add on top of that the fact that payday loans companies calculate interest differently than banks and credit card companies do.
If the cash advance places used the same standards and calculations, they’d have to tell you the Annual Percentage Rate is somewhere between 300% and 400%. You can see why they don’t advertise that. The difference is that the banks tell you what the yearly interest rate is while cash advance places only tell you what the flat interest will be for a short term (usually less than two weeks).
Let’s face it, if you’re like most people, you’re not going to be able to make it through the next week without borrowing some of the money back after you’ve given most of your check to your lender. That’s how they get you. As long as you keep coming back every week, you can kiss hundreds or even thousands of dollars good bye in no time flat.
We guess you could say payday loans are a friend who has your back when you need it, but they’re also a lot like those kind of friends you need to watch your back around. So, if you need one for an emergency, take it, but pay it off as soon as you can.