Software:
Links:
|
| Payday Mayday! The Hidden Danger Of Payday Loans |
|
|
Paydays are the most eagerly looked forward to days in the entire month. It's
the day our coffers fill up and a general sense of wellbeing pervades the
atmosphere. The long awaited personal gift can be bought, dinner at the fancy
restaurant is a possibility and some wise folks even add up to their savings
faithfully at the end of that day.
There are however quite many people
for whom the joy of the payday lasts no more than a few seconds. These would
generally be those who have payday loans to repay. Even before they can feel the
money, it's gone!
What is a payday loan and why exactly is it so
monstrous? A payday loan is a loan of small amounts taken with an
acknowledgement to pay back the same when the next earliest paycheck is
received. The loans are usually for small amounts not more than $1000. These
loans are easy to obtain, as the lenders do not require a credit check or
collateral.
Such loans are also seen as emergency money that may be
required by anyone at any time and such that can't be covered by existing funds
or due to inaccessibility of the same.
For example, a breakdown of the
heating system in winter requires immediate attention. If you do not have the
immediate funds you take a payday loan to have the same rectified.
There
are however certain problems related to such loans that many
overlook.
One of the most important problem is the high rate of interest
that is charged on such loans. It comes across as grossly unfair when you
compare the rates with those of the other loans and discover that the annual
percentage rate (APR) of a normal loan would be 7% while that of a payday loan
averages 400 % and even higher.
Then there are also charges applicable
for the service. For example, on a loan of $100 you may have to pay $20 thereby
bringing the total payable on payday to $120.
Moreover if you fail to
settle the amount on payday you can roll over the same but for which you will be
charged the applicable rate of interest. You may also be charged fees for your
inability to settle the same on the due date.
As these loans are usually
taken for short periods, about 14 days approximately this means that any
rollovers claim increasing rates of interest. The borrower then gets into a
never-ending credit cycle that is very hard to break.
If a payday loan is
taken from unlicensed or unregulated lenders it only makes the matter worse.
Moreover if you have not received the terms and conditions of the loan in
writing prior to commencement, then it becomes even more difficult to assimilate
the total charges due. This can only cause more confusion and problems for the
borrower.
At the end of the day you realize that these payday loans, so
alluringly called cash loans are nothing but monsters that can never be
satisfied.
|
| |
|
|
