Are Payday Loans Really Such A Bad Thing?

Payday loans or cash advance loans serve a specific purpose and as long as they are used for what they where intended to, they can be an excellent financial tool. The main reason why payday loans are considered to be too dangerous is the problem they cause when they are used for other purposes than what they where meant for. When used as a substitute for regular financial loan products, the high interest rates charged make it very easy to get into serious difficulty and ultimately result in the borrower being unable to repay the original loan amount or the interest. This situation normally leads to the borrower going into default and having to then deal with legal fees on top of the loan debt.

Very high interest rates

Payday loans do carry higher than normal interest rates and fees. However, when taken against the background of limited or no credit checks and the general risk profile of the borrower, they actually offer a reasonable value for money.

The risk that the lender is taking is considerably higher than other lenders that offer loans that require stringent approval criteria and income verifications.

Put simply, the lender is entering into an agreement with little or no comfort that the loan will ever be repaid or not. To compensate for loses that he undoubtedly incurs as a result of this practice, the lender needs to charge much higher rates of interest in order to make his business profitable. At the end of the day all lenders are in business to make a profit and if they aren't they wont be around for very long.

What purpose do these loans have?

Once again, as long as these loans are entered into with adequate knowledge and are used for what they where meant for, there is no risk of getting caught into a vicious circle of debt. When you look at the facts and ignore all the urban legends that surround these types of loans you will see that they can and do represent fair value for the risk taken.

It's like that old adage about a bad workman blaming his tools. The tool itself is not at fault, it's almost always the user of the tool trying to blame an inanimate object for their own failure. It's the easy way to save face. It would be the same as trying to use a mortgage to finance a vehicle purchase over 25 years. The wrong tool for the wrong purpose.

The root of all evil?

So, to recap, payday loans should only be used for emergency situations. If you have the time and credit rating to qualify for another source of finances, you should. Only if you need some cash for an emergency to cope with some unexpected expense should you apply for a payday loan.

When the loan is fully paid off, don't make a habit of resorting to them every time you need money. Try and get money through other means before resorting to a payday loan. You need to remember what they are meant for and that their costs are high enough to only use them on the odd occasion.

The increase in household debt is becoming a serious problem all around the world as we chase the material possessions that we can't wait to save for, but blaming the increase in debt on the financial market for offering payday loans is as wrong as it is stupid. Now is the time to take responsibility for your financial situation and not blame the financial products for all our errors. All financial loans are there to be used with discretion, and a full understanding of the terms and conditions that are connected to them. Ignorance is not an excuse.


A. Procos is a former Bank Manager and is currently a financial consultant specializing in payday loans, online payday loans, bad credit payday loan, no fax payday loans, cash advance and student loans. For more information regarding payday loans do not hesitate to visit my Payday Loans Website [http://www.paydayloanswebsite.com]; or alternatively for student loan information visit my Student Loans Website [http://www.studentloanssites.com]

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Boon or Bane? Payday Loans

Did you ever hear the term "bane of my existence?" It's an old one from some pretty dramatic writing. It refers to something that makes your life miserable. How about "boon"? That's probably a more familiar word. A boon is a benefit. You would think it would be pretty simple to sort out one from the other, wouldn't you? Not so when it comes to those tempting "Payday Loans." Every morning when I get ready for work, I have the local morning news station on. And every morning, I hear the same jazzy commercial, set to music, about how easy it is to simply stop into the storefront of this business and receive an advance on my next paycheck. Sound too good to be true? Well, there's a reason for that.

At most of these businesses, you can fairly easily borrow $100-$200 for a flat fee. The consumer writes a check to the payday loan business with the understanding that the check is not currently covered by funds in that checking account. When the next payday rolls around, the business can deposit the check and be paid back by the check amount, which includes a fee for this convenience. Or, the consumer can come by and pick up the check, redeeming it with cash or a money order. Again, a fee (built into the check amount you wrote) is charged for this privilege. Finally, the consumer may also elect to roll over the payday loan---by paying another fee. Can you guess how many people might just be tempted to roll over the loan? Many, as it turns out.

What if you are this consumer? Would it surprise you to know that this little, seemingly helpful transaction just cost you a HUGE amount in interest fees? Interest is not just the actual amount charged. If you are charged $20 for a $100 payday loan, you may be thinking that you are paying 20% interest. But it's much worse than that. You WOULD be paying 20% interest if you had the money for a year. But you don't have it for a year. The rate of interest paid is both the length of time you have the money and the amount you have to repay at the end of that time. So if you have this money in your possession only 10 or 12 days before you pay it back, as required by the payday loan agreement, your interest rate is more like 195% or even up over 250% in interest! This is quite a shock to those who see the payday loan as a way out of a temporary financial pinch. And think what rolling over such a loan week after week can do to you.

Many credit card lenders charge 20-25% for money you borrow from them, either in the form of interest charged on an outstanding balance, or on a cash advance. And cash advance fees may even be higher that the usual stated interest rate of the card. Yet, many of the same consumers who balk at those rates are payday loan customers. They simply don't understand what they are doing. How does this happen? The payday loan businesses are required by law to disclose the terms of the loans they offer. So why in the world would anyone "bite?" Take a look at the (literally) small print on such lending documents. It just is not evident at first glance to the average consumer what interest rate is being charged. And customers of these businesses are often in the lower income brackets, and may not be well-educated about what they are signing. All they may know is that they need the money, and it's being offered by this business.

What, then, should consumers do if they have a legitimate need for the kind of loan service offered by payday loan businesses? As with many, many financial questions, customers should contact their Credit Unions for assistance. At the very least, the Credit Union can explain far more economical ways to borrow money. Consumers are effectively borrowing money if they consistently live beyond their means, and if they consistently rack up more and more credit card debt. Most Credit Unions are an excellent source for the kinds of financial counseling which could help consumers get a real handle on spending and learn to manage money effectively. After all, remember that your Credit Union, a not-for-profit institution, really is there to serve you, the customer. They don't have jazzy commercials on the morning news usually, but they are there on your side. Give them a try.


This and many other articles about your personal finances can be found at http://www.usacreditunions.com Use our “How to Find a Credit Union” page to - Find, and Join one.

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What You Must Know about Payday Loans

Sometimes when things become a little tough, we do things without too much thought. Usually because we want to put the tough thing behind us and move on. This can result in jumping in on payday loans and regretting it later. Payday loans aren't all that evil as long as you know what you're getting into and you take some time thinking about actually doing it and how you'll later terminate the loan.

To begin with, payday loans aren't always a good choice! Don't get tricked by the ads from the mall, radio, television or Internet. Even if you desperately need some cash until your payday, you should consider all the alternatives first. In my opinion, a brief definition for payday loans is expensive cash.

Payday loans are short-term cash loans. The amount of money that can be borrowed regularly ranges from $100 to $1,000, and it depends on the laws of each state. The average term is about two weeks. Payday loans are made by check cashers, finance companies, payday loan stores, and others. They are also designated as cash advance loans, check advance loans, deferred deposit check loans or post-dated check loans.

This is how it usually works: the borrower writes a personal check for the sum borrowed plus a fee and he receives the amount he or she wishes minus the fee. Fees are regularly a percentage of the value of the check, but they can also be a fixed value charged per a specific amount (like $15 for each $100 borrowed). When the next payday comes, the borrower can redeem the check for cash. Otherwise, he can pay the finance charge again and roll the loan for another two weeks.

To get an idea of how expensive payday loans are, you must know that this type of loan costs on average 470% APR (annual interest), while the APR a credit card is rarely higher than 60%.

Let's assume you want to make a payday loan for the amount of $300, the loan fee is of $17.50 per $100, and the loan term is 14 days. Therefore, in order to redeem the check you have to pay $352.50 when the 14 day period is over. You can pay it by cash or you can allow the check to be deposited at the back. If you still don't have this money, you must pay the fee of $52.50 to renew the loan for another loan period. This means that borrowing $300 for a month will cost you $105. That's not cheap at all! By comparison, a $300 cash advance on an average credit card, repaid in one month, would not cost you more than $15.

All you need to get a payday loan is an open bank account and a steady source of income. However, lenders are not necessarily interested to find out if the borrower can afford to repay the loan. If you don't pay the loan, it becomes an uncovered check in your bank account. If you fail to repay it, you will get a bounced check fee from the lender and from the bank. You will receive negative ratings on specialized databases and because of this you might lose your bank account and have difficulty in opening a new one.

Because of the very high cost to borrow and the short repayment terms, the consumers sometimes tend to be trapped in repeat borrowing cycles. Reports show that almost 60% of all loans made every day are either loan renewals, or loans taken out by the same consumer immediately after paying off the last one.

Payday loans with three-digit interest rate are prohibited in twelve states in the USA, where they are considered to be small loans or usury caps.

The internet payday lending has become very popular lately. You can apply online and loans are directly deposited into your bank account. When the payday comes, the amount of money you've borrowed is electronically withdrawn. If you choose to renew the payday loan, the finance charge is electronically withdrawn from your account.

Here is a suggestion in order to avoid getting a payday loan. First of all, shop carefully! If you really need that money, try to get an advance on pay from your employer or borrow the money from family or friends, at least you can do this for free (usually). Figure your daily and monthly expenditures, and try to avoid unnecessary purchases. You should also build some saving, so that there will be no need to borrow money for unexpected expenses or emergencies. If you still decide you want to use a payday loan, make sure you don't borrow more than you can pay with your next paycheck.


Author - Bill Darken - He supplies highly informative eye opening articles and up-to-date loans news as well. You can see it here at loans or if the previous link is not working, you can paste this link in your browser - http://loans-only.com

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Top Secrets for Commercial Debt Collection

Are you a start-up and facing the problem of commercial debt? Have you given-up after repeated attempts to collect debt from a customer? If your answers to the above questions are yes, let me welcome you to the large family of small and big businesses that also suffer from the similar problem of commercial debt. But sometimes even the most hopeless of commercial debts can be collected. All you need is the right strategy and correct moves. Several collection agencies have been doing this successfully for many years. Given below are some top secrets of commercial debt collection revealed by Ranger Financial Services Richardson, TX: You are more likely to catch the attention of the debtors, if you write to them in addition to giving them a call. If you call them for debt collection, there are high chances that your calls will not be answered and in rare cases when your call will be attended, they may have a bad attitude. Sending collection letters is comfortable for you and it will provoke debtors to think of debt payment instead of thinking of an excuse to give over phone Ranger Financial Services Richardson, TX believes in the famous saying, tomorrow never comes. Therefore, ask your debtor to commit a specific date for payment. They may answer that the payment is in process and will be done any time now. Never trust them. Having a specific payment date will set deadline for clients and will make them answerable in case the payment is not done on that date. Understand that your debtor is avoiding the payment because he may be in real financial trouble. Therefore, it is important to be cooperative with your debtor. Since you both share the common goal of payment of the commercial debt, communicate nicely with each other. Work together to make a repayment plan such as repayment in installments that will serve the purpose of loan repayment without too much of hassle. Lastly, leave the hassle on the experts i.e. collection agencies. There are many small collection agencies that will help you collect a commercial debt for less than $30. This a very small price to pay if you have a big amount in stake. Ranger Financial Services Richardson, TX recommends hiring a good debt collection agency to collect your debt if you have failed to do so after repeated attempts. This way, you will not have to waste your time and still you can get repayment for your commercial debt.

Author: Christina K Nicholas. She is a practicing CPA in Richardson, TX, specializing in small business and individual tax returns. For more details about please visit Commercial Collection and debt recovery. Article Source: http://www.articlebiz.com/article/1051532501-1-top-secrets-for-commercial-debt-collection-revealed/

Payday Loans - What Will It Really Cost You?

When you have fallen on hard times financially, or you are looking to move to the next stage in your life by purchasing your own car or house, the options presented you can appear risky and unsatisfactory. Faced with things like high interest rates, the possibility of falling into debt, or further into debt, and the looming prospect of the credit check, it may seem like a better idea to just struggle on month to month rather than dropping into a possible quagmire out of which you can't extract yourself. However, acquiring a loan isn't as scary as it seems.

Times have changed since years ago when the stiff, cigar-puffing loans officers seemed to approve and deny loans based on mood or their opinion on the color of your tie. These days, it is not the loan officer who has the upper hand, and you who are the beggar. You have the upper hand. Loan officers are desperate for clients to loan to, for a couple of very simple reasons. Firstly, fewer people are taking out loans these days.

Secondly, the interest rates on loans are where banks get much of their revenue. Banks operate by taking deposits from clients and paying them a small interest. They then give loans to other clients and extract a larger interest from them, one that more than covers the interest given on the small deposits. And that's where you come in--as long as you have decent credit, a good job, and know how to shop around, you shouldn't have trouble getting a loan, so long as it's within your means.

Of course, big loans aren't the only ones around. For those that find themselves in a temporary financial bind out of which they cannot get on their own, there are such things as short term loans. Such short-term loans, often called "character" loans because they relied on the client's good word and reputation, used to be in much larger supply, but then fell back with the rise of credit cards and the loss of banking's localization. Now they're on the way back, and larger numbers of traditional banks are offering them. Almost one in five loans now fall into this category. But what is a short term loan?

Short term loans average around $2300, and come with a term of around two years. The interest rates tend to be lower than those of credit cards, hence the draw. These personal loans are most often approved or disapproved within one to three days of the application, and one of the biggest perks is that once the term is over, you're done--no minimum monthly payments as you would have with credit cards that keep you saddled with debt and your interest soaring higher and higher.

If you need a small loan, you can visit a payday lender--although it's a good idea to avoid this as best you can. Payday lenders can front your small loans, usually between $100 and $1000, but the terms are short and the interest rates are high, so if you're too quick to take out a payday loan, you could find yourself in worse shape than you were to begin with.

Before you take out any kind of loan, be it a small short term loan to get the rent paid in a tight month, or a larger loan for a car or house, don't simply head straight to one bank and get started. You wouldn't waste a bunch of money on a pair of pants when you knew you could get the exact same brand, exact same pair somewhere else for much cheaper, so why wouldn't you shop around when it comes to much larger sums? Most people don't, but don't fall into the trap of believing that just because you're dealing with big money you can't bargain.

Shop around, compare rates and service, and once you're in that little office face to face with your loan officer, remember your position as a client--they need you. Most customers are all too willing to accept the interest rate offered them, but loan officers usually have a minimum rate they can lower it to--they just need you to help them along.


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Author: Fashun Smith

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Payday Loans To Make Ends Meet Until Your Next Payday Cheque

It is easy to tackle with financial emergencies when you have enough money with you even at the end of the month. But, this seems impossible as most of us usually end up spending most of our pay on shopping and satisfying other personal purposes in the very beginning of the month that results in only a handful of money left for the rest of the month.

You can meet a financial urgency if it happens in the beginning of the month as you have the monthly pay as a backup. However, what will you do if you need cash urgently at the middle or end of the month? Why to ask a friend or family member for money and face the embarrassment or become a burden on them, when you can access payday loans tailored specially to meet instant cash needs.

Payday loans are short-term loans designed specifically for the UK residents helping them meet financial urgencies with ease. Payday loans are also known as cash advance loans, cheque advance loan, instant cash loans or post-dated cheque loan.

People usually use payday loans to make ends meet until their next paycheque. Urgent expenses such as medical bills, phone bills or an unexpected expenditure can be easily dealt with a payday loan. Various kinds of payday loans are available in the market with different characteristics to meet diverse needs of the UK residents, some of them namely same day payday loans, military payday loan, no fax payday loans and many more.

Payday loan can work as an important financial source to bridge the cash flow gap between paydays. These loans are usually approved faster as are meant to meet instant cash needs. A payday loan is offered for a short-term that usually ranges from 7 to 14 days that can be extended up to 18 days. With a payday loan you can borrow any amount ranging from £200 to £1500. You need to submit a signed post-dated cheque in favour of the lender that will pose as a security against the loan.

In the past, there were only few traditional lenders who used to charge high fees and interest rate. Borrowers had no other option but to avail loans at the terms and conditions offered by lenders just to meet financial contingencies. The loan process was really time taking and costly.

Entry of online lenders in the loan market has marked an end to the monopoly practiced by traditional lenders. Now, it has become simple and easy to borrow payday loans. You just need to submit a loan application form online and the lenders will get back to you with the instant loan decision. The online loan process helps in saving your valuable time and money.

You need not to go to the lender to access the cash granted as a loan. It will get deposited into your bank account automatically and on the due date it will be withdrawn from your account, keeping you away from all the troubles and hassles present in other types of loans.

One of the significant advantages of borrowing a payday loan is that it does not involve a credit check. So, whatever may be your credit score - good or bad. A payday loan can be an instant solution to your urgent cash need.

A financial urgency can happen anytime and to anyone. A payday loan in such situations can work as a lifesaver helping you in maintaining your creditability in the market. But, make sure to make a thorough research and analysis before you take the final decision regarding the loan deal that will help you save good sum of money in the future.


Tim Kelly is an expert in finance having completed his LLM in Finance (Master of Laws in Finance) from Institute for Law and Finance at Frankfurt University. He is currently working with Best Payday Loans as a financial advisor. To Find Best payday loans, online payday loans, Payday Loans, and cash advance payday loans visit =>http://www.bestpaydayloans.co.uk

Article Source: Tim Kelly

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