Payday Loans: The Good, The Bad, and The Ugly

A payday loan is a short term loan, meant to provide people with money that they need for unforeseen financial setbacks that occur between pay periods. Having worked for one of these lenders for a short time, I feel that it is my duty to inform people about the good, the bad, and the ugly of the payday loan business. I hope that this article will be helpful to the financially challenged people of America.

The Good

For some people, a payday loan might be just what they need to get them back on their feet. A payday loan provides people with enough cash to make it till your next payday. If you have the means to pay it back right away, you can avoid paying the obscene amounts of interest that they tack onto your loan. For many people, though, it it begins an unyielding cycle of financial entrapment.

The Bad

The majority of people who take out payday loans do not have the means to pay back these loans with their next paycheck, and become victims of these loan sharks' extremely high interest rates. (I have seen loans with interest rates as high as 750%, and have heard of higher rates from similar lenders.) Their inability to pay causes them to extend these loans, causing more fees and even higher interest rates. Many people will borrow from another lender to pay off the first, only to bury themselves further in debt.

The Ugly

The worst thing about these lenders is that if you miss even one payment, they will harass you relentlessly until they receive that payment. They will call you at home, and at work, sometimes multiple times a day. They will harass your friends and relatives that you may have listed as contacts on your loan application. They will lie to you, they will threaten you, and they will take you to court and win because they have the law on their side. You signed a contract, you owe them this money, outrageous fees and interest or not.

Here is some hopefully helpful tips to avoid becoming trapped in the payday loan cesspool.

• Do not take out a payday loan unless you have the means to repay it in a timely manner.
• If you miss a payment, contact the lender immediately and make a payment arrangement, and stick to it, until the loan is paid in full.
• Avoid borrowing from multiple lenders at one time. Having too much on your plate will just dig you further into debt.
• Look for other ways to raise money before borrowing from a payday lender. There are many organizations that offer emergency financial help to those in need. For information in your area, call 2-1-1.This is an information line sponsored by United Way that can provide you with information on programs that may be able to help you in your time of need.