Commercial and Internet ads for payday loans are a dime a dozen these days. And if you’ve seen one you’ve seen them all. Payday loans all work basically the same way–you write a check (or grant the lender permission to access an electronic account) to cover the money you are borrowing plus the finance charge. This transaction is then held by the lender until your next payday. Of course if you don’t have the money to cover the cost of the loan by your next payday you’re pretty much out of luck!
It is likely this and many other reasons why payday loans are legal in only thirty-seven U.S. states–with our sunny California being one of them. Nine times out of ten the consequences outweigh the benefits of getting a payday loan. And with online payday loans, there is an added risk of fraud. You hear about online scams all the time, and they are definitely something you do not want to happen to you! You need to be careful when giving out financial information in any situation, but be particularly careful when it’s over the Internet to a payday loan service!
If you find yourself struggling to make ends meet a payday loan is probably not your best option. Contact me for a free consultation and we will discuss your financial situation to determine what is the best course of action for you!
Wondering if there’s an advantage to using a payday loan service? (Bankruptcy attorney David Lozano says, “definitely not!”)
The tempting offer of a payday loan is hard to resist. They make it sound as if there are no strings attached–the service simply lends you the money you need until your next paycheck. The hard truth, however, is that you often end up owing more money than you borrowed. Whatever label it is given–payday loan, cash advance, check advance, deferred deposit–it amounts to the same thing. The payday loan service cashes in while you struggle to stay afloat!
Here’s how it works, if you want to borrow $100 to get you through the next two weeks, you write the payday loan service a check for $115–that’s a 15% fee, which equals a 391% Annual Percentage Rate. Then they hold the check for those two weeks. But what happens if you can’t afford the expense? Most of the time you can’t renew or extend your loan. So you either you have to cough up the cash or they rely on a collection agency to get the money out of you. In the cases that you can renew or extend your loan, it comes at a costly fee, which almost always outweighs any benefit of getting the advance in the first place!
Payday loans aren’t what they are cracked up to be. If you’re having financial troubles your best bet is to go to a professional financial adviser! For a free consultation to discuss your options, contact me! We can find a solution that benefits you instead of adding to the problem!