Why Not to Get a Payday Loan
You see the ads on television all the time, especially at night, for companies that offer payday loans as a debt solution. But be advised that despite the appeal, payday loans are almost never a good idea unless you make a great deal of money at your job. Unlike when you consolidate student loans or apply for a mortgage, payday loans have terms that are not very friendly for someone low on cash.
The purpose of payday loans is so that you can buy something - anything - when you need it, before your paycheck comes in. But the problem is that payday loans are a self-replicating cycle.
Say you want something at the end of the month that you can’t afford. You get a payday loan, purchase the item, and then pay back the company with your paycheck. Sounds simple, except now two things have occurred:
You have less money from your paycheck since you owe some money to the payday loan company.
You now have less money during the month, so that if at the end of the month you need money again, you have to get a payday loan again, starting the cycle over.
Eventually you get into somewhat of a payday loan rut, where every month at the end of the month you need to get a payday loan again. Except each time you do, the fees cause the amount of money that you are actually receiving from your paycheck continue to decline.
Payday loans should be avoided at all costs. They can be used in absolute emergencies, but only if you know you will be able to pay them back and never take one out again.
