You are Crazy to Use Payday Loans


by Jeffrey Meier - Date: 2007-02-17 - Word Count: 634 Share This!

I know this goes against a growing industry in America, but I think you are crazy to use payday loans, and here is why. If you could qualify for a loan for interest rates of 10-20%, or even higher from these payday loans specialists, then I believe you can qualify for loans from a traditional lender for about half that rate. The only real convenience you may get from these payday loan providers is getting the money really fast, but the price you will pay is meant to keep you paying for a lot longer than you may have planned. Think about it if they were not making money on these loans, why do you see more and more of these businesses? Do you really save time by using these legal lenders? How about the fact that you are providing your personal information to people who may not have received the same ethics and financial training that people who work at a bank or credit union receive? In a time when identity theft is on the rise, why would you share this all important information with a business when there could be some questions about the long term nature of that company?

So what is this phenomenon that is sweeping our country? Payday loans are a high risk loan business that bases its rates on the probability of recovering the loan. Since it has a higher risk of loss, it passes this risk to all the potential loan recipients in the form of a higher rate, and a rate that is calculated weekly, and at times even daily. While there are some traditional banks that use high rates as well, the overall banking rates are at least half of what these payday loan businesses offer. The fact that people are in need of the money quickly would also suggest that the ability to re-pay the loan in a period of time that would reduce the cost of the interest is also figured into the business model. The majority of the payday loan customers are also young and poorer people who simply cannot afford the addition of another high interest loan. This does not dismiss the fact that people should have personal responsibility in there own lives. These payday loans are simply an extension of credit to people many times without the consideration of ability to re-pay. Now let me clarify one thing, no business will give money away without knowing they would not be able to collect it back, but I have seen the ads, they all promise getting you money quickly, and I rarely hear the advertisements state you will pay greatly for that right.

So how can you get some money without putting your finances and credit reputation at possible risk? It would be good advice to at least attempt to borrow the money from a bank or credit union. I would maintain that if you meet the guidelines of payday loan lenders, such as a steady job with sufficient income, and perhaps a car title or other tangible assets, you should be able to get a bank loan as well. I would also believe that your personal information would be more safely guarded at an established and long term lender. The choice is yours as always, but it is your good name and reputation that you are putting on the line when you deal with payday loan companies.

Now having stated that I believe you would be crazy do use payday loans , I also recognize the fact they are a part of life today and if you do choose to get a payday loan you should be informed as possible, and there are many great articles available on the subject. Money decisions should always be considered carefully before you sign on the bottom line.


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Jeffrey Meier of Jam727 Enterprises at http://www.Jam727.com offers Information articles and Payday Loan information like this http://www.jam727.com/PaydayLoan/paydayloan/index.html

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