The Truth about Payday Loans

More and more of the companies are lowering their interest rate, but there aren’t many, if any who will go below the 30% mark, so you would still be paying back $1,300. Just imagine what you could do with that additional $300 or $400 that you had to pay back in interest. Those companies are out there to make money and they are going to stick it to you as much as they possibly can.

Borrowing money from a payday loan company is one of the worst things you can do. You find yourself in an endless cycle of borrowing money just to have to pay back more money. Chances are you won’t be getting off that wheel any time soon. And the payday loan companies are counting on just that.

If push comes to shove try to borrow the money from a friend or relative until your next payday so that you don’t have to pay so much money back in interest. The interest payments are the worst part of a payday loan and there is no way the company is going to waive that fee for you. That’s how they make their money.

Some weeks or months are better when it comes to income, however, if you start saving something out of your paycheck then you can start an account that will help you pay for whatever emergency comes up.

Another negative about those places is that once you borrow the money, pay it back when payday rolls around you more than likely still don’t have enough money to cover you through your next payday. So, what do you do? You go back to the same payday loan company and get another payday loan, that you will again have to pay interest on so that’s another $300 or $400 that you will lose in the second round.

Getting a payday loan might sound like a good idea in the beginning but generally it never turns out that way. Yes, it’s a fast way to get the money you need if you have an emergency that comes up and you don’t have the money on hand to pay for whatever it is you need. But, you should know that when you borrow that money you do have to pay it back– with interest.

The interest rates on payday loans vary from one company to another so you should at least shop around. They can range from 30% to 50% which is a HUGE amount of money. Let’s say you take out a loan for $1,000 just as an example. We’ll go mid-range on the interest at 40% on the loan and keep in mind it’s only until your next payday. Once you pay that money back you will have paid back $1,400– YIKES! That’s a lot more money than you needed in the first place.

Terry Phong

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