Many people turn to a payday loan when they need a small amount of money for a short period of time. While the opportunity is available, you need to think twice before you head down this financial path.
Even if you have the best intentions, one slip up with a payday loan can cost you hundreds of dollars. Not to mention the fact that it can put unnecessary pressure on your financial life in the future.
Here are three of the main reasons to avoid a payday loan:
- Lender deception. With a credit card company or local bank, you know you’re dealing with a reputable lender. You can trust them to provide honest service and to answer any questions you may have. Unfortunately, this isn’t the case with most payday lenders, as all they care about is lending you money and making a profit in return.
- More expensive than other options. If you think credit cards have a high interest rate, wait until you see what you’re getting into with a payday loan. Payday lenders typically charge somewhere in the $15 to $20 range for every $100 you borrow.
- A difficult cycle to break. You take out a payday loan with the idea that you’ll never do so again. However, you soon find that it’s difficult to escape. Here’s why: you may not be able to repay the loan on the due date, meaning it costs you more money in fees. This leads to your debt dragging on for much longer than expected.
The best thing you can do is avoid payday lenders altogether. You may be tempted. You may even think you can get away with borrowing money “just once.” Before you make the decision to apply, compare the pros and cons to other options. This will typically lead to enough information to bring you to your senses.