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| Debt Central's consolidation services are available throughout the United States |
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Payday Loans
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Called by many names, payday loans, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans, they all add up to the same thing, a high interest trap. Let's say you need a hundred dollars before your next payday. The lender is more than willing to let you have the hundred for only a $15 fee. Not bad, you say? Even if you borrow that hundred for full 14 days it buys you, that is an annual interest rate close to 400%. Would you really borrow a hundred if you had to pay back $400 in a year? The trap comes when you can't pay back the loan from your next paycheck. The lender will roll over the loan for another $15. You end up paying $30 for a $100 loan for one month. Or worse, you take out another loan and another until you find yourself in court watching the lender garnish your wages.
The pitch is simple. You write a personal check for the amount you want to borrow plus the fee. The loan is secured by your personal check and a loan agreement you sign. The lender then agrees to hold the check until either your next payday, or you redeem the check, or you ask for an extension and replace the check with a new postdated one. What happens if you can't pay? Remember that loan agreement? Somewhere in it you agreed to allow the lender to not only recover the amount of the post dated check but also court fees, late fees, interest fees for after you defaulted, and any non-sufficient funds charges the lender incurred when trying to cash your check. The lender will of course report you as a deadbeat to the credit agencies ruining any attempts to get a loan later from a reputable source.
Don't fall for the payday loan trap. If you need short term money, and you have a job, most banks will be wiling to work with you. If not an outright loan, they probably will issue you a limited dollar credit card that you can take a cash advance against. Don't take anymore than you absolutely need, and pay back some each month. This not only saves you money by having a lower interest rate but also will help you build a good credit rating. If you need the cash to pay a creditor, another option is to ask for an extension. Find out what the creditor will charge for waiting for a payment, a late charge and/or additional finance charges or a higher interest rate. It could be cheaper than a payday loan.
If you are at the point that you are considering a payday loan, sit down and make out a budget. See if there are any places to save, or whether you need long term help. If you need help contact Debt Central. We can put an end to your debt worries without you having to resort to a payday loan.
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