Can Payday Loans Be Trusted?

Posted by admin in Uncategorized on 04-03-2013

Payday loan companies  offer what seems like a promising opportunity. However, if you evaluate  their services at a deeper level, you will see that there are some very  negative aspects to payday loans. Payday loan companies can’t be  trusted and we’re going to reveal the reasons why. It’s time that  consumers like you understand the hard facts about payday loans and the  reasons why they should be avoided like the plague.

Payday loan companies promote consecutive loans

A payday loan company will sometimes encourage their customers to  take out consecutive loans! Any financial expert will tell you that the  last thing you want to do when you are in debt is borrow more money.  Payday loan companies will make it sound like a good thing and they will  promote the positive benefits to it, without mentioning the  considerable debt it will put you in. Payday loans are very high  interest rate loans. The more borrowing you do the more interest you  will pay and the deeper your debt will get.

Payday loans have terribly high interest rates

The interest rate that you pay is representative of how much the  company is charging you on top of your loan. If you have a 20% APR, this  means that over the course of a year (annual percentage rate), you will  pay 20% in interest to the company. Payday loans are short-term, so it  won’t take a year to repay the loan. However, most payday loan companies  charge 200% interest or higher! That means your interest payments will  accumulate quickly.

Payday loans are supposed to be short-term

A payday loan is supposed to be a short-term loan. However, some  payday loan companies will allow you to extend your repayment date as  long as you want. This is bad because the longer you extend repayment,  the more interest you will pay. Any legitimate company would charge a  fee for not making your payment on time. However, payday loan companies  let you just keep going because they know their interest rate is so  high, that it’s going to make them money.

Payday loan companies do not check your credit score!

You probably know by now that credit is how banks determine your  eligibility for financing. Payday loan companies do not check your  credit whatsoever. This is an immediate sign that you might be dealing  with a company that is all about profit and not about secure financing.  By not checking credit scores, they can work with customers that will  undoubtedly not make their payments on time, and that just means more  money for them. On the surface, it seems like a good thing, but it can  be damaging to your finances.

Payday loans require immediate repayment

If you need a loan for anything serious, then a payday loan is not  the answer. They require immediate repayment, meaning you have to have  the loan paid off within 3-4 weeks after you begin borrowing. Most  people need loans for purchases or debt repayment. A loan that has to be  repaid quickly does them very little since it’s basically the same as  paying all at once.

 Author Bio: Stevie Clapton is a passionate blogger on everything and anything financial, you can find more of his articles all over the financial community.

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