A payday loan is a small (the range is usually around $100 to $500), short-term loan that is supposed to help out the borrower until the next payday. It works just like a cash advance with your credit card, but a payday loan usually has a fee for every hundred dollars lent.
This option is quite popular among the working and lower-middle class populations who find themselves financially drained before the next payday. The borrowers figure out how much they need to tide them over until their next salary arrives and simply risk the fee in exchange for having actual cash.
Payday loans may be perceived as a desperate measure on the borrower's part. The need for cash is often immediate and pressing and the fact that getting a payday loan will set them back even further usually meets an attitude of "crossing the bridge when they get there". Beware though. This is the kind of thinking that usually sinks borrowers in a debt cycle.
Many label the payday loan industry as predatory for taking advantage of other people's financial hardship, but there are those who simply look at it as an option that people who are not eligible for credit cards, bank loans, and other alternatives that require good credit history should be thankful for.
Some people who have been forced by circumstances to take advantage of payday loans point out that a conscious effort at money management is necessary not to get stuck in debt. If it means having to hold back $250 from your regular expenses to get out of debt, you do it even if you do not use your car for a month, cut back on water and power consumption, live off the land, etc.
For those who are considering applying for their first payday loan, there are services that offer the first loan free of charge. If a payday loan is the cash advance option that you pick, this is something you should look into.
2 comments:
Payday loans have helped me many of times. When I'm short money for some grocerys, or a medical bill, or a car repair come up when I have no other way of taking care of it. It saves me on over draft fees with my bank.
Hey, I enjoyed your blog. Very informative. I agree completely. Keep up the good work. I think quick loans or " payday loans " can be very helpful at times. Especially when you have no no credit and no family to turn to. Sometimes you just have to do it. I'd rather be a little in debt, than homeless.
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