Payday Loans: why they are wrong and how to maximize

Almost everywhere you look these days you can find advertisements for Payday loans. And like other financial products, it can be concluded that the more a product was announced, the higher the profit margin that provides for the seller.

Pay Day loans in a variety of securities, including cash loans, check advance loan fast cash loans, monitoring post-loans, and deferred deposit check loans. But no matter what they call, the product is still basically the same.

What are Payday Loans

Payday loans are small short term loans with high interest. As usual the work is that the borrower writes a check payable to the creditor the amount you want to borrow and the loan fee. "The company gives credit card borrower of the amount of the check minus the loan fee "in cash. For example, if you want to borrow $ 100 for two weeks, you can write a check for $ 115 and receive $ 100 in cash.

They are intended for people who need a small amount of money for a short period of time. In theory, they could be useful for a family that, for example, has an unexpected born this month have had to pay immediately. This has left the family short of money to follow their obligations, such as rent and food. So be ready and it is an opportunity for individuals to gain quick access to cash without the need for credit lending, the face value, it seems useful.

Why are male

The problem is in the details. Going back to the person who borrowed $ 100, now imagine that two weeks are up. And at the end of the duration of the loan, the borrower must "buy" inspection by the creditor, the payment of $ 115 in cash or roll over the loan for another two weeks. This adds another $ 15 dollars for the payment which means that two weeks later, $ 130 is due to come. For those not familiar with the lending industry, in May of this year is not a bad deal. After all, the lender has some 'risk, because it is not yet verified your credit, right?

Well, not exactly. The most insidious of Payday Loans is the amount of their interest. Mortgage's annual May near'8%, while a credit card, which by most accounts frieze wear the cost around 30 - 40% per year. But the comparison only for a Payday loan, which has an annual interest rate of 400 - 700%, is surprising.

A Payday loan is one of the most expensive lines of credit, a person can achieve. Moreover, unlike a loan, or if you default, you can be harassed for the late payment, Pay Day loan can simply deposit the check. When you bounce, you have committed a crime Payday pursued that the company can use leverage to make you pay any price. They may threaten you, almost immediately, with the criminal procedure so that creditors can not.

So why do Payday Loans exist. The cynic might say that only exists because the loan is a powerful lobby that many rural political lines. And if it is true in part, is also important to consider that, despite their shortcomings, Payday Loans in May to fill a good niche for a small portion of the population.

Make the best of Payday Loans

Those who can not meet the credit cards, have no friends or relatives prepared to pay in cash, and can not obtain an advance from their employer, often have nothing to turn to have a little 'money to fill a need in the short term. In these circumstances, and only in such circumstances, we can find a solution acceptable to use Payday Loans. In these types of situations, it is important for borrowers to consider carefully the conditions of the loan. Although it is essential to ensure that borrowers of "change-trap" the reality is that some will not. And if you fall into this unfortunate few, it is important that you know, the contract is signed.

Especially in the contract is as follows:

-What are the remedies of the creditor to take if you do not pay on time

What APR loan-taking is

-That the reversal of the policy and the organization is ready

-What their story with the pursuit of prosecutions against those who default

While knowing these things and the comparison with their competitors, not to convert the decision to adopt a Payday loan in a pleasant environment, which limit the damage of these loans and we hope to eliminate the possibility of slipping into the trap that catches many rollover Payday Loan users.