Are Payday Loans a Bad Idea?

Are Payday Loans a Bad Idea?

In a time where money is hard to come by and the national jobless rate remains over 9% payday loans seem to be the only option for many. Even the high fees and interest can’t keep people away. When you’re livelihood is at stake or an untimely car repair breaks your bank, the risk just seems worth it. Though often, as we planned to do one thing another happens. Timely payments yield to unexpected emergency and we are forced to default or pay a ‘renewal fee’.

Renewal Fee (n)- A fee charged for the privilege of being in the same amount of debt the next month. (ingenious)

OK, that was sort of a joke. Payday loans can serve a purpose. My opinion is they should only be used in dyer emergencies, when you have the ability to pay the loan off quickly. Often people get trapped in paying renewal fees and end up in a vicious cycle of debt.

The loan agreements are signed with the understanding that if you can’t pay the loan in full then the fees may pile up quick, one must assume. Still, the use of payday loans continues to rise and so does the debt.

So the lesson learned by many is Be careful. These high fee, short term loans can turn into trouble quick if not paid in full with your next paycheck. And fittingly, Payday loan debt has skyrocketed proportional to the interest and need for quick cash. They don’t always have to end in uncontrollable debt. Plan your budget and know how you will pay the loan on time and in full before you take one out.

What To Do If It’s Too Late

If you find you’re already in payday loan debt you can find payday loan consolidation programs which offer free consultations so you know what you’re getting involved in. A good company is responsive, helps with collection calls, is reasonable and, of course, successfully consolidates loans. Do some research to make sure you’re going with a debt relief company that you feel comfortable with.

By Rich Desena

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