There are hundreds of places within every city to find a payday loan. Payday loans seem like they are available on every corner with lights advertising free money today! What the consumers don’t know who decides to take advantage of these loans is that the interest rate of many payday loans can be upwards of 300%! This is by far the highest interest rate that is accompanied with any financial service, and can increase when the consumer fails to repay the debt on the promised date.
A payday loan is available to those with a job in need of funds until their next payday. These loans are often given when the consumer has a post dated check and can provide this check, just in case the payment is defaulted upon. There is often no credit check for a payday loan, which makes it enticing to consumers that have mismanaged their money in the past.
Why is a payday loan a bad thing? Payday loans are promising the money that you are making in the future towards the repayment, which means the moment that you receive your paycheck, you are in debt! Therefore, you are going to need to find a way to increase the next week’s income just to be able to catch up on the regular expenses that you require! There are many consumers that become trapped in the payday loan cycle, unable to get out! These consumers spend hundreds of dollars per year in interest – money which could be attributed to a savings account to provide an alternative to payday loans.