No doubt about it, fast payday loans
are convenient and becoming increasingly popular for people in times of
financial stress. They will help you get through that rough spot between
paydays when you just have to have that extra cash to pay that unexpected bill.
But if not careful, these fast payday loans can become something you rely on to
make to your next payday. You can get wrapped up in an endless cycle of
borrowing and repaying just to live day to day. Careful planning and budgeting
is needed when one of these loans is used, so the repayment can be made as well
as payment of the rest of your regular bills. Without this careful planning, it
can become the main source of readily available cash-which is an expensive trap
to fall into.
The idea behind fast payday loans is
quite simple. The lender will loan you a percentage of your paycheck, which
will be due at the arrival of your next paycheck (a few days to a few weeks).
Due to the short-term basis of these loans, lenders charge very high interest
rates-anywhere from 400 to 800 per cent annually. They also charge fees to
process the loan-which can be quite high since they are charging for the
speediness of the loan and they are trying to make a profit-they lose money in
interest due to the shortness of the loan. Even with these high interest rates
and fees, the idea of a cash advance on one's paycheck is just to hard to pass
up-especially when in an emergency situation-financially.
Upon entering into a contract with a
lending company for a payday loan, it is expected that the full amount will be
repaid at the time of your next paycheck. People that carefully plan and budget
will pay off the loan and still have money to pay for their other regular
monthly expenses. Those that do not only end up paying back part of the loan
and extending out the balance-usually with additional fees and interest rates.
This continues to grow and what started out, as a simple payday loan becomes
something complex. The lender may even be able to get what is due to them from
your next paycheck-leaving you once again short on cash. This then keeps you in
that terrible cycle of dependency.
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