In today's economy the threat of
going into debt is ever increasing, yet still as unappealing as ever. In a time
where the stability of banks is coming into question, it isn't a comforting
thought to think about borrowing money. But what if you are in need of a quick
financial fix? Are payday loans a safe way to go even in a down economy?
Let's take a look at some aspects of
a payday loan and what they mean for potential borrowers. First of all, what is
the premise of a payday loan? Payday loans are short term loans for small
amounts that are intended to cover financial needs until an individual receives
his or her next paycheck. Payday loans can be used for any purpose, but are
usually reserved for extenuating circumstances when there are no other options
to cover a financial burden.
Sometimes those two weeks just don't
go fast enough and unexpected expenses occur. Such issues can include anything
from health issues to automobile repairs to rent being due. During such times a
payday loan can be obtained in order to relieve a financial burden at a relatively
small cost of interest. Payday loans tend to have a higher rate of APR than a
full term loan would carry, but this number is often misunderstood.
Because the loan will only last over
usually a two week period, this annual percentage rate becomes crunched into a
smaller time period, resulting in a higher number of APR. The actual interest
cost to be paid usually comes out to around a dollar a day per $100.
When compared to the interest cost
of a regular, full term loan, this number is very reasonable. The small,
temporary nature of payday loans differentiates them from regular loans.
Payday loans were not intended to be
long term, stressful procedures. Rather, they are available for those who,
while receiving a regular income, find themselves in need of a quick,
convenient solution at a reasonable price.
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