Payday Loans-Are They Right For You?
Oz Hoopes is a freelance writer. Learn more information about payday loans at http://www.getecash.com/
As the ups and downs of the economy start to resemble an amusement park thrill ride, many people are having to look outside normal routes for quick financing. One such option that many are turning to is the “Payday Loan”.
A “Payday Loan” is generally a loan in the amount of three hundred to one thousand dollars that has a high interest rate and is due in full upon the customer’s next date of pay. There are many benefits and drawbacks to this type of loan. One must analyze their financial situation and logically ask one’s self, “Is this loan right for me?”.
In the analysis, the customer must consider the benefits. One such benefit is that no credit history is pulled. If the customer has been struggling financially and has questionable credit history, this may be the only type of financing available.
Another benefit is the quick availability of the money. Usually, you simply walk in with your proof of employment, pay stub, check book and bank statement and within an hour, you walk out with the cash. This may be especially beneficial if the financial need is urgent.
Once you have looked at the benefits, you must pay close attention to the drawbacks of the loan. One of the major drawbacks of this loan is the interest rate. Many times the interest rate on these loans are in excess of three hundred percent. That is a high price to pay for convenience.
Another drawback is that the loan is due in full with interest by the date of your next paycheck. If the loan was made purely out of convenience (you need the money now, not two weeks from now), this is not an issue. However, if you need the loan in addition to your upcoming paycheck, this presents a problem. Although most businesses that offer these loans do allow people to pay only the interest and renew the loan, this may present a problem once the note is renewed multiple times. After three or four renewals, the customer has essentially repaid the principal of the note, yet still find themselves in debt for the principal and the interest.
Although the price is high, a payday loan may meet an immediate financial need. However, before taking a payday loan you should question whether a payday loan is right for you and your financial need. If that need is a long term need or if there is any question of being able to repay the loan in a timely manner, the answer may not be a payday loan.
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