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I'm desperate. Should I get a payday loan?

June 25th, 2010 at 12:44 pm

Your desperate for money and don't have enough to make it until next week. Should you get a payday loan? Absolutely not!! Payday loans are one of the worst financial products on the market. Lets take a look at exactly how these rip-offs work.

Lets say you want to borrow $500. What is going to happen is your going to write them a postdated check or agree to a authorized withdrawl for $575. In return you would get $500 cash and after 2 weeks they would cash your check for $575. But that is rarely what happens. A typical borrower will not have enough money to cover the check so they will "flip" or "rollover" their loan for another 2 weeks. On average a borrower will flip their loan 8 times before paying it off. In this example that is an APR of 390%. Doesn't sound like such a good deal anymore does it?

High interest payday loans are illegal in 15 states including Washington DC, US Virgin islands and Puerto Rico. That just goes to show you that these loan companies are praying on poor people and need to be shut down everywhere.

This blog stresses the point of having an emergency fund which would keep you out of the payday lenders office.

4 Responses to “I'm desperate. Should I get a payday loan?”

  1. Broken Arrow Says:

    I once worked security at a payday loan place.

    It's amazing how some people will literally get into an argument with the loan officers when they get declined for a loan. From their voice and wording, you can tell that some are literally scared and don't know what to do without this loan.

  2. north georgia gal Says:

    I am ashamed to say that I have fallen trap to these loans. It has been about 10 years since I had a payday loan and to keep rolling it over. I regret that it happened and had I been smarter with my money it wouldn't have happened. I think people fall into the trap because they are desperate and don't see any other way to pay their bills...they don't see the big picture, just that they will have money to pay bills with.

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