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Payday Loans and What You Should Know About Them

Written By emilie dane on Monday, April 22, 2013 | 5:57 AM


The world economy has been on quite a wild ride through out this year and the situation potentially may get worse in the coming years. Banks and lending institutions are seeking solutions in a chaotic situation. For people with less than great credit scores, banks are not showing any interest in lending money.

There are lending institutions that offer payday loans regardless of poor credit scores. However, there are some things to look out for.

We all must keep in mind that the purpose of a quick payday loan service is to offer a quick loan to solve a monetary issue. It is a short term loan and should be paid back fairly quickly. You should make sure that you are making $1,000 or more per month; have a bank account and United States citizenship.

The payday loans business is a multi-billion dollar industry where people borrow money in order to get them over until the next payday. This type of industry deals mostly with the lower class that may be short of money until payday.

When you calculate the Annual Percentage Rate or (APR ) on these loans, you could find yourself paying through the roof. If you were to take a $400 loan for a period of 2 weeks at $15/$100, even though this does not sound like much, the APR would come out to 390%. If this loan was renewed 10 times in the year, I could expect to be paying $600.00 in fees.

Many people who take out payday loans, may roll them over. This is dangerous and costly. The high APR makes it virtually impossible to get out from the debt.

The best way that you can benefit from a payday loan is to stay away from them. You should strive to budget and manage finances in a way that does not require the use of a payday loan.

If in the case that you do decide to take out a payday loan, make sure that you are absolutely able to repay what you owe by or before the due date. Avoid rolling over cash advances, and payday loans, because you could find yourself in a financial ditch that is tough to get out of.

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