If you have extremely bad credit and
find yourself in a financial bind, one of the few kinds of financing you can
turn to is payday loans. In recent years, it's become easier and easier to
obtain payday loans, and more cash advance stores have popped up in the US than
there are McDonald's and Starbucks combined. The money comes with no
restrictions on it and can be obtained within minutes of filling out the
application.
However, payday loans have a darker
side. They should only be used as an emergency funding source when they are
really needed, and should not replace fiscal responsibility or other means as a
regular source of funds. If they do, you can end up in a trap and pay several
hundred percent interest each year on small loans.
What is a Payday Loan?
A payday loan is a short term loan
given in small amounts of money, usually in the range of $100 to $500 depending
on the size of your paycheck. The lender then charges a certain fee, usually
around $10 to $20, and you pay the loan back with the fee you're your next
paycheck is issued. There are no credit checks involved in the application
process so anyone can apply
In order to get approved you to only
meet a few general criteria. You must be 18 years old and have a checking
account and a steady job. The application process only involves the gathering
of basic information such as your name, employment, address, and banking
information. The money usually gets put in your account the same day, many
times a few hours or minutes after your apply.
What a Payday Loan Should be Used
For
A payday loan should only be used in
emergencies and to meet very short term needs that you absolutely cannot wait
to get money for. In this circumstance and this circumstance only should you
take out a payday loan and pay it back with your very next check. Never make a
habit out of using them.
The Dangers of Payday Loans
Payday loans are dangerous because
they get people into a trap. If you can't afford certain expenses this payday,
odds are you're not going to be able to afford them next payday either,
especially after losing a few hundred dollars to pay back your loan. The loan
companies know this and will gladly roll over your loan for you, granted that
you pay them the interest and fees due for this payday. If you get caught in
this trap, you will end up paying huge amounts in interest by the time you can
pay off the loan.
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