We all know the benefits payday
loans can offer. A fast and easy way to get an advance on your paycheck may
seem great at first. While these advances are convenient to anyone needing
quick cash, it can ultimately become a never ending loop of losing more money
than you realize.
If you're considering using a payday
loan then you are likely living paycheck to paycheck just like many other
people today. An advance on your pay seems like a great way to get mid week
funds to tie you over until you actually get paid, but think about the design
of this system.
Most cash advance services allow you
to not only take out one paycheck advance but two at the same time. The reason
for this is quite obvious if you think about it. It is designed to let you take
one advance to pay your debt and another to handle your normal living costs.
This provides a great recipe for disaster.
The companies that provide payday
loans do so at a cost to the client. While you receive the money you need you
pay it back with interest just like any other loan. Prices charged by these
services vary based on the amount of the advance. The more money you borrow the
more you pay back. This combined with being able to take out two simultaneous
payday loans can potentially take hundreds to thousands of dollars away from
your yearly income.
Suppose you make $500.00 per week
and take out a $200.00 payday loan on a regular basis. The cash advance
interest on a $200.00 loan is on average around $30.00 dollars. That's $30.00
per week you would be paying just to get some of the money you already earned
earlier than usual. If this became part of your weekly routine you would be
paying $1560.00 per year just for payday loans.
Most frequent users of cash advance
services don't stop to think about the long term financial impact it can have.
Getting your money quickly seems very appealing on the surface. In a more sever
circumstance many consumers become so caught up in the loop they are borrowing
their full paycheck on a weekly basis. This results in the use of two payday
loans just to keep up with debts owed to the cash advance service.
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