All that glitters isn’t gold. Yes, even when it is the loan for which you have waited a long time. Payday loans are exactly like the proverbial gold, only this time; it doesn’t even have the appearance of gold, it has all the beauty of rusted iron.
A payday loan is a short-term loan option, explored by persons who need financial help, but cannot access any other credit facility. As the name implies, payment of the loan is made on the next payday. The loans are most times for few hundreds of dollar. What makes payday loans attractive is that you do not need a credit check, in essence, you do not need to be credit worthy to access payday loans. The loans are also readily available once the borrower has applied. The internet is now home to a lot of businesses offering payday loan services.
Payday loans are scary and everything unpleasant about a loan, are magnified in payday loans: the rules are way stricter than regular loans, the fees paid are more, and the interest rates are largely prohibitive. So if you had it at the back of your mind to take a payday loan, please take a look at why doing so won’t be such a great idea.
Prohibitive interest rates
Payday loans can charge as much as 20)% – 675% as annual interest on loans. Break that down into months, and you’d see you aren’t getting an excellent deal. With payday loans, the higher you loan, it doesn’t become cooler, rather, it becomes hotter. The interest adds up quickly the more money you take out as a loan.
Payday loans are not long term solutions
If you are taking a loan, there is a huge chance that you are in some sticky situation financially. While payday loans are an excellent way to make cash available quickly, they do not provide long-term solutions to the problems that drove the borrower to that point.
The loaners are sometimes dishonest.
You have heard about the dishonesty of the loan shark, some business persons that give payday loans will make you wish you dealt with loan sharks instead. In fact, if the deal starts to make you feel uncomfortable, don’t take it, in fact, don’t go to them. Some of this persons include in the contract or deal, terms that are for their selfish gain, sadly, this will be to the detriment of the borrower.