Why would you choose not to get a payday loan? Well there are advantages and disadvantages in applying for payday loans. The advantages are already clear to almost anyone: payday loans are convenient to get and we need them. So what are the disadvantages? Let’s take a fair look at the disadvantages. Payday loan became a huge concern and a theme of argument. Throughout the U.S., governments on every level are looking at payday loan outlets with increasing apprehension.
The main concern is that low-income people in financial trouble will do anything to get some financial help, and others are taking advantage of their situation. That’s how many people think. Well but is this true? Do really financial organizations take advantage of low-income people who are in financial need? Or as some people say, do they “prey” on them?
The argument is huge. The financial organizations say that they are not doing anything illegal. Someone needs cash, a financial help, and they help them. What is horrible in this? And the controversy continues. To find and answer or to understand the issue, let’s examine it. Let’s see why does the controversy still continue?
Well if you can solve all your problems and you can go on with your life you won’t need any payday loans, and or any headaches. Unfortunately, unexpected emergency situations are part in our lives. And you are in a situation when you need to borrow money right away. And of course the fastest way is to get a payday loan. So what you do is filling out an online application and taking let’s say $1,000. And you plan to return it due to your next paycheck. But, what if your next paycheck, after your budgeted expenses, wasn’t enough to pay back the loan?
This is the concern right here that a lot of people have and argue about. But wait; there is a well explanation for this situation.
If you came up short again, you needn’t worry – payday loans are renewable, or extendable. This process is called “rollover” and, if you do it too many times, it could end up costing you a lot of money. Let’s look at an example: Say you borrowed $100 for 14 days (until your next payday). You write a check to the lender for $115 (includes your $15 fee). The APR (annual percentage rate) of that loan is 391%! If you can’t pay back the $115 on the due date, you can rollover the loan for another two weeks. If you rollover the loan three times, the finances charge would reach $60 for a $100 loan. That’s pretty high interest, don’t you think?
These are things you need to consider when you’re deciding if a payday loan is the right choice in your particular situation. Yes, the cost of the loan is high, but it provides you with the money you need, when you need it, thus avoiding a lot of stress and trouble. It’s very true in consumerism today that convenience costs money. But is it worth that much? That’s a question you’ll have to answer for yourself.