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Payday Loans Hidden Dangers

By Edited Oct 27, 2013 0 2

When in deep financial trouble, most of us would be delighted to discover those best payday loans to help them overcome the difficult situation. However, many persons ignore the hidden dangers that are behind a payday cash advance loan, no matter how brilliant it may sound. I've heard this saying in some TV show: if it seems too good to be true, probably it is. In this article, we are going to see what exactly are these payday loans, or cash advance loans everybody's talking about lately.

What Is a Payday Loan

Payday loans are also known as cash advances or paycheck advances and they are short terms loans that need to be repaid at the next payday of the borrower. Such cash advances, even if they claim to be the best payday loans someone can find, usually come with very high interest rates. In some states, the maximum APR is regulated by law, but in others it isn't, so people short of cash are at the good will of these lenders.

Even with a not so high APR, the EAR, which is the effective annual rate of the interest can be much higher, so if you need some quick cash until your payday you may want to keep your eyes wide open and take care what you compare with what.

Which Is The Best Way I Get A Payday Loan?

Getting a cash advance to repay on your next payday can be done in two ways: you either find a retail lender and go to their shop to take your loan, or you use one of the online payday loans that are available in large numbers. Such websites would ask you to fill in a form, then you'd get your loan in a very short time. Many times, you don't even need to send them a fax for confirmation of your bank statement or other required papers. Probably the qualifying condition vary from lender to lender, so you'll have to check it yourself if you want to find a best payday loan for your location and for your particular situation.

The amount of money you can lend can be as low as $200 and can go up to $2500. It's a short term loan, remember? Nobody would give you too much, because you're supposed to repay it at the next paycheck, plus the interest, so you'll have to make enough money to cover it fully.

There are lenders who allow you to agree on a payments schedule for your payday loans, so you'll be able to pay a few installments instead of the full amount when you get paid.

What you need to worry about when making use of a payday cash advance loan is that it may give addiction. You'll only enter a vicious circle, because at your next payday, you'll have too little money left to cover all your expenses, so you'll probably going to make use of another small loan to pay at the next payday, then another one, until you'll end up in misery and depression.


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Comments

Apr 3, 2010 6:03pm
kp3028
This is a very slippery slope to be using....but some people just have no other choice.
Mar 28, 2012 5:02am
toebunkers
We all know that money can be tight sometimes but I just don't feel payday loans are the answer. Not with some of them having 2000%+ A.P.R.
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