Avoid taking payday loans as much as possible. This statement may surprise you due to the impression of payday loans as a quick and convenient source of cash in emergencies. But I found this statement to be correct from my experienceA few months back, I was in a financial fix and needed $500 to pay my car repair bills. I borrowed the amount from the payday loans lender who charged me a fee of $60 for a time period of two weeks. Unfortunately, I couldn't meet my expenses until then and had to extend my payday loan period for an additional two weeks. For this, my lender charged me $60 again. Weeks went by and I found myself coming back to the payday loans lender, paying $60 on every visit. After 5 months, I realized I had paid $600 for getting $500! Call it a result of my extravagance or an unorganized budget; whatever may be, but the convenience of payday loans comes at a high price. Despite this, payday loans are in vogue. They're also known by names like cash advance loans, check advance loans, postdated check loans, or deferred-deposit check loans. Payday loans have the peculiarities of being small, for a short time period, and at a high interest rate. These loans are easily available at pawnshops, gas stations, Internet firms, check cashers, and others. Usually, when taking a payday loan, you write a personal check that includes the amount you want to borrow and the amount charged on the loan. This check is payable to the lender. You are entitled to repay the loan either on your next payday or another date within the next two weeks. Let me tell you that while taking payday loans, you have three choices: you give the check to the lender who'll deposit it himself, you pay the lender in cash equal to the amount of the check, or you simply extend the loan and pay the fee again. Taking payday loans might be easy, but they're highly risky. Imagine that your check to the payday loans lender bounces. You'll have to pay penalties to the bank and your lender. What if your lender is shrewd enough to threaten you with prosecution for writing a hot check? What if you are unable to repay the loan on time? You're at a risk of falling into a vicious circle of debt. You'll go on paying the loan fee but won't be able to wipe off the payday loan. How scary! A survey reveals that Americans usually take more than 6 loans per year. Why take such risks when you have alternatives to payday loans? I would suggest persuading your creditors to give you more time for paying your bills. You can pay your bills as soon as you get your paycheck. This will prevent you from going to payday loans lender. The simplest way to avoid knocking the doors of payday loans lenders is to borrow from a friend or a family member. If it's impossible to refrain from taking loans, hunt for other available sources in the market. Go for payday loans as a last resort. You may be able to find a bank or credit agency that will be ready to lend you a small loan with a reasonable interest rate. It's better to compare the annual percentage rates (APR) and the dollar amount of the finance charge. You may also consider getting an overdraft protection on your bank account. This will not only avoid returned check fees, but also act as a pillar of support during financial emergencies. If you own a credit card, it's great! Just take a small cash advance. However, for people with bad credit, payday loans may be the only way out from their financial adversity. Finally, let me tell you this: if you're just a little short of cash every month, change your spending habits. Believe me, there's something wrong in that. Stop lavish shopping and organize your budget. With time, payday loans will be a thing of the past for you.
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