You see them in every strip mall east and west of the
Mississippi: Cash Advance, Cash-N-Go, Check Into Cash, Urgent
Money Service, and the list continues. What exactly are these
businesses that seem to offer you money right when you need
them? They are cash advance companies which often make loans
commonly called payday loans. In many ways, these companies have
become the country's modern day loan sharks. No, they will not
cut off your thumbs or pour cement around your feet and make you
swim with the fishes. They will, however, torture you with fees,
upon fees, upon fees.
So what is a payday loan? A payday loan is a cash advance loan.
The loan in itself is held by a personal check. For example, you
could write a personal check for $135 in order to borrow $100.
The check casher will agree to not cash the check often for
fourteen days. This can be extended if needed, but not without a
charge. Many people use it to bridge the gap between pay checks.
But the Federal Trade Commission calls it "Costly cash," and for
good reason.
Using the example above of a $100 loan for a check of $135, you
will see when the math is done how truly costly a Payday Loan
is. When you are in desperate need, the $35 seems miniscule.
But, when you consider that this charge will occur every
fourteen days if you do not pay, this equates to 650 percent
APR. A bad credit card will offer you 28 percent APR. When you
choose this option, you are going to pay much more in charges
and interest and could find yourself even deeper in debt.
So what are your alternatives? If you seriously cannot make it
until next payday, there are other options you may have instead
of taking out apayday loan. Sort your
bills. Choose which ones can wait until next pay day and make
them wait. If you have creditors, you can negotiate a new or
temporary payment plan to see you through.
About the author:
Sara Chambers is a marketing consultant and an internet content
manager.
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