There are many people who find
themselves in significant financial straits and do not know what to do about
the situation. If such a person learns about payday loans through an online
search or by driving past a storefront with a sign advertising this type of
loan, a quick decision to pursue this type of getting fast money might be made.
It is a frequent occurrence that a person applies for this type of loan without
doing due diligence about the negative consequences. Local Credit Unions would
recommend that other sources of obtaining some financial relief. Prior to
applying for a payday loan, one needs to learn the pertinent facts about the
loan.
BIG FEES WILL BE ATTACHED TO A
PAYDAY LOAN
Most people are aware that any loan
will have interest and require proof of income. However, one needs to know that
the interest on a payday loan can come in at anywhere from 24 to 39% which adds
up to a lot of money that one already doesn't have available. Even if one lives
in a state that has put a cap on payday loan interest rates, interest is still
high. A person who gets this type of loan might not be able to pay it back on
his/her next payday and extends the loan. When this situation occurs, interest
fees have to be paid again. In addition, there are several high fee
"administrative" fees for the loan that will have to be paid. It can
happen that people who become involved with a payday loan find themselves
seeking one payday loan to pay off another, the situation spirals out of
control and financial ruin looms in the near future.
SIGNIFICANT FACTS TO REMEMBER
Those who get a loan fully intend to
repay the debt. However, when one has a payday loan, it is to be paid by the
next payday. However, one must remember that there are other bills to pay, food
and gas to buy and the funds for the loan payment may not be there to repay the
loan. For these reasons, one can become involved in a vicious cycle of trying
to find more cash streams to meet all financial obligations. Such a cycle seems
never ending until the outcome may have to be a bankruptcy filing. Declaring
bankruptcy is something that most people want to avoid.
Dealing with the horrible cycle of
debt will have an effect on the whole family. Worry becomes constant and the
bill collection calls, letters and threats can result in overwhelming stress
that can cause depression and other medical problems. Some people become unable
to work and unable to take action or seek help to solve the financial problems.
If people are fully informed about the negative ramifications of payday loans,
they should be able to avoid this solution to lack of money.
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