Payday Loans - Money to Last

Payday loan is an unsecured loan given with a short period of maturity and high interest rate. Such loan is somewhat the same with credit card cash advance, only a borrower usually provides lenders with post dated checks or a debit authorization on their paycheck as payment for the amount of loan plus interest.

Before making such loan, the borrower must see to it that he or she can repay the principal and the interest on his or her next payroll. The borrower must also understand what possible consequences are if he or she cannot pay the loan back on time.

Risks and Warnings when Applying for a Payday Loan:

1. This type of loan cannot be used as a primary source of emergency money because of its high interest rates and additional fees. Also, there is great risk of not being able to pay the whole amount on time since the interest is so high and almost unaffordable.

2. Before borrowing money from payday loan, make sure you have tried every possible alternative on getting instant cash. Payday loan must only be treated as a last solution to a problem.

3. Always ask yourself if the loan is necessary. Often times, people apply for payday loans out of habit. These people do not really need the money; they are just used to having extra cash on their wallet. So if one time they don't think they don't have enough money, they borrow money such as payday loan.

4. Payday lending companies sometimes withdraw the postdated check the borrowers have issued before the actual agreement date. So instead of helping them with the financial problem, these companies further bring the borrowers down on their knees by inflicting additional charges and penalty.

5. Before making such loan, the borrower must always read the agreement statement and understand the terms and conditions stated. The borrower must also understand well the conditions of he or she was not able to pay the borrowed amount plus interest on the agreed date.

6. A borrower should also not be afraid to ask questions so that he or she would know what to expect once he or she has already taken the loan.

7. The borrowers must make sure that before applying for a loan, they can afford paying back the total amount of loan plus the interest.

The Issues of Payday Loans:

1. Payday loan has gained popularity especially to people who are in emergency situation, financial crisis or are hard up with money. It is an easy solution to money problems because it is easily obtainable and very accessible.

2. The intention of payday loan becomes very controversial because many borrowers cannot actually pay back the money they have borrowed.

3. Financial experts say that payday loan is a form of loan sharking because this actually places borrowers in deeper financial status.

4. Payday loan companies profit most from people who were unable to pay their debts back on time. A good 80% of the profit of payday loan companies comes from the interest rate accumulated over time.

5. Payday loan companies often practice aggressive collection over their costumers; threatening their costumers for writing bad check. This is in spite of the fact that they accept postdated check with insufficient funds.

6. Financial exploitation is very common because almost everyone is willing to join the bandwagon of constant loans and would think that we don't have much of a choice in this situation. This is especially true because borrowers are in a very stressful and pressured situation where they need to produce money immediately. And with the availability of this type of loan, borrowers think that it is the only solution to their need of cash which makes the matters worst.

The big question is, are going to be free of financial problem after applying for payday loan? Is there a way out, an easy solution to financial trouble? Or once you are in this situation, will begin a whole new cycle of debts and more debts? Think of these over and take these points to help you realize if it is really wise to apply for payday loan.


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Payday Loans - Money to Last


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