Payday loans, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans - any of this something you've heard of before or seen around? The FTC define them as "...small, short-term, high-rate loans..."; nifty, little loans offered from check cashers and other finance companies when you need the money now! Think of it as a cash-rewarding credit card, in a sense that, just like a credit card, you get the cash when you need it, but have to pay it off later. Why would it be a problem, right? A lot of people own credit cards...those companies, along with the FTC, get their money in the long-run anyways, right? Wrong. Ever stopped to wonder why in some towns, you see Payday loans more than in other towns? These companies feed off poverty-stricken communities. Almost unnoticed, they move in, and before you know it, they are feeding the feeble minds of the poor with promises of wealth, and an answer to debt. It's nice to get a pay advance, until you go over your spending limit, then realize because of the offered security of another paycheck, you have spent way too much money and am further down in debt. I like to discuss my mental cycles - different events that link together and form a sort of reoccuring effect. These cycles can happen anywhere. McDonald's, for instance, is a cycle. Cash is delivered with every purchase of a Big Mac, the fat, obese lug who ordered that meal, sits down like he does everyday to stuff that hunger-demishing death into his face, and McDonald's is introduced to another third-world country. Then repeats, until that fat, obese lug is buried and gone, but, the cycle continues because McDonald's gloats that it serves 1 billion people a day. Payday loans have an equally disturbing cycle; they are financial-horror trendsetters. Their cycle begins by advancing someone with a quick loan, giving them the cash on the spot that they would've gotten employed and entering a new payday. They now hold in their hands filthy green, which equals to the overall total of two cashed paychecks for them to do whatever tickles their consumer fancy. Oops! What's this, Freddie...lost all that cash already??? Do keep in mind, beginning the first day of next month, we track your loan...pay it in full, who we deliver you a few notices that respond with: "Forgetting something? We had a deal! Give us the money by next week, or we start increases the balance you owe us!" Suddenly, that smiling, friendly look you saw on the face of Bob, the loaner (Loan-shark Pimp!) isn't too friendly anymore. He wants his money! But stupid you! Pulling out your pocket sleeves to reveal moths that flutter away from your existence - you spent all that money on a guitar, or other possessions, or maybe you used it to get out of the debt you were already in, only creating more debt for you to pay off again. "Well, I still have my other paycheck...wait, darn it! That's right, I sold that one already off...Jimminy Christmas! Will I ever win?" Sadly Freddie, not when you tangle with loan-sharks disguised as legit business...
I'll provide a quick summary of what happened to Freddie.
A borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Fees charged for payday loans are a percentage of the face value of the check or a fee charged per amount borrowed.
Let's say Freddie has his check back, has never messed with a payday loan before, and is standing right in front of the small housing building, about to enter to get his "free" money offered to him on the radio. He has a $145 check because Freddie works hard, but isn't rewarded for it with much. He needs out of debt quick, and is happy to see that $290 should do it. Otherwise, if he waits around anymore, he'll have to pay double or triple that! Freddie had continuously heard of payday loans on radio, on television, he even drove passed the place everyday going to work. Freddie needs $145 more dollars for the $290 debt. He rest assures that he can live off $175 he's entitled to get from a friend of his. He receives his $145 on the spot, but, what he doesn't know is they charge a lending fee on top of that, and, if that money isn't paid off, they continue to charge lending fees and other fees to his title. Freddie is no longer in debt. He lives off the $175, and, at the end of the month, decides to splurge after being so responsible with his green, and finally paying of his prior debt. His employer regretfully informs him that there was a situation at work, and his paycheck was held. A week goes by. Finally, he gets his check for $175. He heads down to Payday Loan, where, upon arrival, they tell him his lending fee, and also the charge on not paying off the loan in the days they agreed on. He's now in debt again.
Cash Advance Loans - the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan, or hold it for a certain extension, let's say, three times, the finance charge would climb to $60 to borrow $100. Does it make sense to pay for money? My mind is blown! How is that even possible...you might as well keep the $60 and like recycle or something to get the additional $40...donate blood platlettes or something. That should get you pretty close to the money you need.
You can find out about so many different options of getting money then using Payday Loans. I consider them a pollutant, and, like every other pollutant (Wal-mart) they need to be stopped.
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