Short term loans : Payday loans are bad for your finances
Short term loans or payday loans are those which are available to the consumers without a credit check. So, even if you have bad credit, you will be able to borrow the required money from a payday lender. As these lenders do not do any credit checks, the cash gets available to you quickly enough and so the name fast cash loans. Moreover, you are generally required to pay back the borrowed amount after your next payday. However, the interest rate on these loans is high enough and they do not require any credit checks and are also not secured by collateral.
Why are payday loans bad?
Payday loans are bad for your finances because these have high interest rates and if you fail to pay it off within stipulated time, it will hurt your credit and the debt amount will increase in leaps and bounds. Moreover, the payday lender can also threaten you about the payment.
Other than this, you should also know that it is always better to avoid taking out a payday loan because in most if the states, payday lending has been declared illegal. Even if your state allows it, you may even be able to find out that most of the payday lenders themselves are not licensed to business in your state. They are scam companies.
Moreover, they charge you so high interest rates, you are almost bound to get embroiled in debt problem. You may think that if you take out a payday loan, you will be able to pay off your debt as of now. However, you need to think about the future too. If you take out a payday loan, it is quite obvious that you will have problems in paying back the borrowed amount because of the interest rate as you are already in financial problem. That must be the reason you are borrowing the money from a payday lender. Again, to handle this situation, you may think of taking out another payday loan. This doubles your debt problems by pushing you more deep into debt.
If you had taken out a payday loan, you need to first find out if your state allows payday lending. You should also try to find out the state laws on payday lending. That is, if your state allows such lending, then check if the lender abides by the laws, the interest rate cap and so on. If you think that the lender is charging you more than the state law allows, you can file complaints with the State’s Attorney General and the Federal Trade Commission or FTC.
However, if your state does not allow any such lending, you can do away with the debt by only paying back the principal amount that you had borrowed. Still if the lender harasses you for more payments, you can again file complaints with your State’s Attorney General and the FTC. Many people get into the trap of a payday lender without knowing what they are leading themselves into.
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