This one is simple. Or should be in any case. And yet, the industry keeps getting stronger and more prolific. But let me be clear on this one. Do not touch Payday Loans!
Payday loans are something that I and other financial folks like to call Parasitic Lending. They tout their convenience and ease all the while (like a parasite) putting you further and further behind with their high fees. That money that you thought you needed so badly becomes about 25% lighter before you even leave the office and if by some chance the check you wrote them is bad? You could easily rack up enough fees for that to exceed over 50% of the “loan”.
I cannot say this enough. Debt is BAD! And Payday loans are the worst of the bunch. The only thing that I can think of that is worse would be bookies that take broken fingers and knees as fees rather than money. Yes, they are that bad.
Do yourself the favor. If you’re even thinking about using a payday loan service, don’t. Things will be tight for a while, but if you truly work at it, you can get by without them and you will be much more financially sound without them.
Beating Broke Rule: Don’t touch PayDay Loans
There are plenty of alternatives around. You can get a pretty good rate on a shorter term loan through a peer-to-peer lender like Lending Club. You can sell off some of the junk you don’t need for some quick cash. You can ask your bank or credit union. You might be surprised by what they say. Especially if you’ve got a relationship with them.
I started this blog to share what I know and what I was learning about personal finance. Along the way I’ve met and found many blogging friends. Please feel free to connect with me on the Beating Broke accounts: Twitter and Facebook.
You can also connect with me personally at Novelnaut, Thatedeguy, Shane Ede, and my personal Twitter.
As a bankruptcy attorney, nearly every potential client I speak with has jumped on what I call the “payday loan hamster wheel.” Once you get on it, you never get off. These folks are predatory, offering “loans” on nearly criminal terms to desperate folks who lack proper financial education. Great advice in this post!
This is more like a warning, and I hope people will real it before taking out loans. It’s not really a bad idea to have loans, as long as the reasons and the repayment capability is there.
Not all payday lenders are predatory, as much as not all the cases are unsuccessful and not all the borrowers are ripped off. If the industry keeps on going and there’s a demand, there’re reasons, don’t you think? Reform banking and make traditional accessible, otherwise more and more people will keep on refering to payday loans and many will keep on getting into more debt (the terms are clear, if a borrower get’s into trouble with a legit lender, for example, goes to URLREMOVED and gets all the information about this option, and still defaults, it’s evident that the reason is this borrower, not a lender).