Payday loans are used over a short period of time, usually weeks. Most people use them to tide themselves over until their next payday. Most of the time, you can walk out with cash (or money in your bank) in just a few minutes, without a credit check.
Because it is so easy to get money, payday loans are popular. However, many people believe that you should avoid them at any cost.
That being said, here are some reasons to avoid using a payday loan.
They are expensive. You will be amazed at the amount of interest that you will owe on a payday loan. Though you may avoid your credit cards because the percentage is around twenty or thirty percent, the truth is that it is much higher on a payday loan. In fact, you may be charged two to five hundred percent interest, if you figure that the loan is only good for a few weeks.
Because of this, many get stuck in a cycle when it comes to payday loans. They need to take out another payday loan, just to repay the first one. In fact, the Center for Responsible Lending research says that up to seventy-six percent of loans are used to pay off older payday loans.
With the cycle, you can easily continue to get farther into debt. You may need a new payday loan every few weeks to pay off the last loan, meaning that you will find yourself in even worse debt in just a few months!
Payday loans can be a bad idea, especially since most people find themselves in a cycle that they can’t get out of (along with a load of debt)! Many people have to take out another loan to pay off the first and then another loan to pay that one off and so on, until they can’t even begin to see their way out of it. For this reason alone, you should try to avoid payday loans if you can.
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