24 Feb 2008 12:33:29 | Fredric Johnson
Payday loans seem so tempting; get your money now and pay them
back at salary day. The interest is high, but whatever – you can
afford $10 or $20. In addition, the loan process is so simple:
if you deliver your application, you got your money! A goldmine
if you are short of money …or not?
Let us go deeper into the disadvantages of payday loans: 1.The
interest is huge. $10-$20 per $100 borrowed. Of course, this is
affordable as a one-time fee, but if you are using a payday loan
service once, then you are most likely to repeat this action,
which bring us to the next point… 2.If you are short of money
this month, then you are most likely short of money next month
(because you have spent some of your salary in advance).
A payday loan that cost $20 per $100 borrowed, taken 10 days
before payday have a yearly interest rate of $730. You might
think: who cares, I can afford $20. Maybe you can, but if you
are likely to repeat payday loans then your annual cost for $100
per month is $240. You do not need a payday loan if you can
afford this amount.
Theory, you will say. I need money now. Do not panic; look at
the alternatives to payday loans:
1.If you are due to payments, call your creditors and ask for a
delay to you payday. Most creditors agree to this and the
interests, if any, are usual much cheaper than the payday loan
fee. 2.Use your credit card if you have one and pay back before
due date. Most credit cards do not have any interest if you are
paying back within a month and the cost of withdrawal is lower
than $20 per $100. 3.Ask your local bank for a loan of the same
amount as the payday loan amount. You will get much lower
interest and, if you want, a repay plan. 4.Ask for a loan quote
on an Internet bank, the time before you get the money might be
1-2 days longer than with your local bank. 5.Ask your employee
for an advance payment.
When should you consider a payday loan? If you really need the
money and all of the above suggestions are out of the question,
then payday loan might be your solution. However, try to let it
be a one-timer…
About Author :
Fredric Johnson is a contribution writer for Pluto Loans, an
information site on loans and credits
