Reasons Why You Should Avoid Payday Loans
Although payday loans get extremely poor publicity due to the nature of it all, people still go for payday loans because of various reasons. If you compare the number of storefronts that lend on a payday basis, you’ll find that it is higher than the number of McDonald’s in the US alone.
Payday loans are offered in many names; cash advance loans deferred deposit check loans and even post-dated check loans. Whatever names they use, the procedures, as well as the rates, are the same.In order to understand the vicious nature of payday loans, let us look at the reasons why you should avoid them no matter what.
1. Interest rates
A usual interest rate that you would have to pay in a payday loan is almost triple or quadruple the rate of what you’d typically pay with a credit card. In some cases, you’d have to pay ten times than average rates. This is the reason why this kind of loan is more popular in areas where the crowd cannot realistically afford conventional loans.
2. A never-ending ordeal
Once you have acquired the loan that you think you’d be able to pay off, you’ll soon realize that you’ll have to ask for more time. By asking for more time, usually two weeks, you’ll be rolling over the money and hence, end up repeating the same ordeal for probably another five months or even more.
3. The ease of access
Normal loans take time to process, but when it comes to payday loans, you do not have to wait for long since you’ll be getting it in a very short time. In fact, all you need is a few minutes to secure one. But unlike other loans, you wouldn’t be able to change your mind after you have finished getting one and hence, you’ll be stuck with a burden you never asked for.
4. Automatically siphons your money
Many payday loan givers mandate that they have access to your account so that after the papers have been signed, they’ll pull the money straight out of your account when the time is right. Getting this to stop is an even bigger hassle especially if you find yourself in a situation where you do not have the money to support yourself as well as the debt repayment. Even after you find a way to do this, you’ll still be plagued with overdraft fees flooding your mail which is sent from the bank themselves.