Avoid taking out a payday loan if you can. You would be better off pawning something of value than taking out a payday loan. Payday loan companies are nothing but pirates looking to take all your loot. It sounds like a simple process. You write a check knowing you don’t have the money and get a loan of a certain dollar amount and don’t have to pay the money back until your next payday.
Its a little more complicated then you think. Cash advance companies thrive on people who just need a little extra money to get by. The truth about payday loans is that they charge you a ridiculous amount of interest on the money they lend. For example say you need to borrow $200.00 till your next payday. Your currently living check to check as it is. An unexpected car repair comes up. You now have to take the money you were going to buy groceries, gas and pay your electric bill with to fix your car. You are considering a pay day loan. You find a payday loan company. When you get to the clerk you tell her you need to borrow $200 she tells you no problem we can lend you $200.00 till your next payday. You say great. She tells you there is a fee of $40.00 and to write out a personal check for $240.00. You need the money so you agree. Two weeks pass by and its time to pay up. They deposit your check into their account it clears. That wasn’t so bad right?
You are probably asking yourself what if something happens and I can’t afford to pay them on my next payday. Believe it or not they will let you write another check. They help put you even further behind. Here is the thing they will let you continue to write them worthless checks until you get to a certain dollar amount. Once you reach your max you can no longer write checks to them. So what happens when its time to collect and you don’t have the money. I’ll tell you. They will actually deposit your checks into their accounts and let them return knowing you don’t have the money. Why? So that you will come back for another payday loan. You not only get charged a fee by the bank but also by the payday loan company. The vicious cycle continues.
If that isn’t bad enough if you have gotten in over your head with payday loans you could be in big trouble. They will stop at almost nothing to try and collect on you. I have seen it. They will call your bank everyday trying to find out if you have funds to cover any of the checks you wrote. If you do, they are on the way to the bank to try and cash them out. I’ve seen them waiting in line outside before the bank even opens to get the check cashed knowing that you just received a direct deposit. Please avoid these at all costs. You may get more than you bargained for.