Payday Loan Legalized Highway Robbery Or Real Financial Help

Payday Loan Legalized Highway Robbery Or Real Financial Help



Payday Loan: Legalized Highway Robbery Or Real Financial Help?
Need extra money to​ get you​ to​ the​ next paycheck? Payday loans come to​ the​ rescue .​
However,​ you​ should be prepared to​ pay the​ price which is​ usually a​ hefty one .​
But there are steps you​ can take to​ minimize the​ financial damage.
What are Payday Loans?
Cash advance loans,​ post-dated check loans or​ deferred deposit check loans are high-rate loans and are intended to​ be used for short term .​
Emphasis here is​ on​ short term,​ usually 14 days since most of​ us get paid bi-weekly.
How does a​ Payday Loan work?
The old economy created the​ idea of​ living paycheck to​ paycheck .​
As if​ that wasn’t bad enough .​
In today’s economy many don’t even get to​ the​ next paycheck .​
So,​ the​ potential borrower writes a​ personal check payable to​ the​ lender for the​ amount she wishes to​ borrow plus a​ fee .​
The lender cashes the​ check and keeps the​ fee,​ of​ course .​
Ideally this type of​ loan will get the​ borrower room to​ breathe and he/she can pay off the​ loan when he/she gets paid .​
Lets take a​ look at​ an​ example .​
Ms .​
Susan Borrower needs $200 and the​ cost is​ $30 .​
She writes a​ check for $230 and the​ payday lender agrees to​ hold the​ check until her next payday that is​ usually 14 days away.
After 14 days,​ depending on​ the​ particular plan,​ Ms .​
Borrower takes $230.00 in​ cash to​ the​ lender and takes back the​ personal check she wrote .​
Or,​ she can roll-over the​ check by paying a​ fee to​ extend the​ loan for another two weeks .​
Each time she rolls-over the​ check,​ she will pay a​ fee that in​ this example was $30 .​
In theory,​ if​ she rolls-over the​ check for one year,​ she ends up paying $30 for 26 times or​ $780 for borrowing $200 .​
How is​ the​ payday loan fee calculated?
Usually lenders charge a​ fixed fee for per amount borrowed .​
For example $10.00 for every $100.00 you​ borrow and it​ can be as​ high as​ $30 for every $100.00 you​ borrow .​
Ouch and double ouch! This translates to​ something like 700% annual rate of​ interest and some people are worried about the​ 20% credit card interest rate.
How can Truth in​ Lending Act help you?
Under the​ Truth in​ Lending Act,​ the​ lenders must disclose the​ cost of​ payday loans .​
So look for them to​ compare .​
Among other information,​ you​ must receive,​ in​ writing,​ the​ finance charge (a dollar amount) and the​ annual percentage rate or​ APR (the cost of​ credit on​ a​ yearly basis) .​
What type of​ collateral should you​ have?
Your personal check is​ the​ collateral .​
Reverting back to​ the​ old days of​ my word is​ my bond .​
But since many people break their words as​ easily as​ they would their bonds,​ lenders make these loans very very expensive so that those who do pay will carry the​ cost of​ collection from those who do not pay .​
What alternatives do you​ have instead of​ payday loans?
Contact your credit union or​ small loan company,​ find out if​ your company offer any short term assistance .​
I​ know it​ could be hard to​ tell friends and family members about your financial hardship but swallow your pride a​ little bit and ask them for help .​
Just make sure that you​ don’t swallow your pride too much by not paying them on​ time.
If you​ are borrowing to​ pay other debts or​ other bills,​ why not just ask your creditors for more time to​ pay your bills? Find out what they will charge for that service including late charges and additional finance charge or​ a​ higher interest rate .​
What steps can you​ take to​ reduce the​ cost?
When you​ need credit,​ shop carefully .​
Compare offers .​
Look for the​ credit offer with the​ lowest APR.
Compare the​ APR and the​ finance charge (which includes loan fees,​ interest and other types of​ credit costs) of​ credit offers to​ get the​ lowest cost .​
Some firms will offer you​ a​ low cost guarantee that helps you​ save time in​ comparison shopping .​
An example of​ this type of​ guarantee is: Must be a​ verifiable,​ bona fide offer from an​ online payday loan provider .​
Excludes one-time,​ promotional offers .​
Rate comparison must be based on​ a​ 14 day loan of​ less than $500 .​
How to​ cure the​ problem not the​ symptom?
Pick up meditation and prayer and I​ don’t mean bombarding God or​ whatever higher power you​ believe in​ with requests for money .​
I​ mean take the​ time to​ get to​ know your higher Self that can help you​ look at​ life in​ a​ more balanced fashion .​
This knowledge can help you​ control emotional stuff which are major reasons for out-of-balance expenditures and emotional spending binges .​
Who knows,​ you​ may even be able to​ have a​ direct communication with God and straighten out more than your finances.
Remember that the​ outer world is​ just a​ reflection of​ us inside and we cannot change our outer circumstances without changing what we think in​ our hearts.
The need for money usually stems from a​ combination of​ low income and lack of​ disciplined spending habits .​
Take steps to​ improve your income which usually starts with better education .​
Look for ways to​ improve your education and acquire new skills that can help you​ get better jobs and higher paying positions .​
I​ know it​ is​ hard to​ get enough energy at​ the​ end of​ 50 – 60 hour week to​ study .​
But,​ don’t you​ rather have the​ stress of​ studying for a​ better future for a​ limited time than to​ keep worrying about payday loans for years to​ come?
Also,​ with the​ Internet,​ you​ may have small business opportunities that did not exist before .​
Take a​ good look at​ where your money went during the​ last six months .​
If an​ item shows up over and over,​ it​ is​ no longer a​ one-time deal .​
Make a​ budget that really reflects your monthly and daily expenditures.
If you​ need help working out a​ debt repayment plan with creditors or​ developing a​ budget,​ contact your local consumer credit counseling service .​
There are non-profit groups in​ every state that offer credit guidance to​ consumers .​
These services are available at​ little or​ no cost .​
Also,​ check with your employer,​ credit union or​ housing authority for no-cost or​ low-cost credit counseling programs.
Finally,​ if​ you​ decide you​ must use a​ payday loan,​ borrow only as​ much as​ you​ can afford to​ pay with your next paycheck and still have enough to​ make it​ to​ the​ next payday .​
What are the​ benefits?
So what are the​ benefits to​ this payday loan? It sounds like there isn’t any .​
With so many companies cropping out every day offering this service and thousands of​ individuals using them and even offering testimonials to​ their benefits,​ I​ have to​ concede that there are benefits.
To start with,​ many times Payday Loans are really the​ only fast alternative to​ get you​ out of​ a​ financial jam .​
The qualification is​ hassle free .​
You can get a​ yes or​ no answer fairly fast and it​ can be done online .​
In many cases there aren’t any credit checks.
Some lenders do not even require you​ to​ fax them documentation.
Your inquiry is​ kept confidential.
And you​ can have the​ cash by the​ next business day.
* DISCLAIMER: Vishy Dadsetan,​ www.MyPersonalFinance.com or​ My Favorite Shop,​ Inc .​
do not endorse any reverse mortgage product or​ lender .​
This article and website does not provide legal,​ accounting,​ or​ other professional services .​
If legal or​ other expert assistance is​ required,​ the​ services of​ a​ competent professional should be sought .​
Although Vishy Dadsetan has made every effort to​ ensure the​ accuracy and completeness of​ the​ information contained in​ this site,​ it​ assumes no responsibility for errors,​ omissions,​ inaccuracies,​ or​ inconsistencies.




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