When looking to take out a payday loan, the first thing a person needs to do is some investigating of the services offered, or at least checking out some payday loan advice.
We here at Help payday Loan Debt thought we would post a bit of a guide to follow when thinking about these loans.
We will cover both the right way and the wrong way to use these services.
We will also show some examples of just how bad things can become and how quickly they can happen if you get caught up in the payday loan trap.
We hope this helps you in dealing with these kinds of short term high interest loan companies.
What are payday loans?
Payday loans can be a life saver or a life destroyer, depending on how well you use and understand them.
They come in two forms. You can get one online or in brick and mortar storefronts.
Most loans are from between $50 and $500 and are set up for two weeks or until your next paycheck..
The loan will either set up as an automatic withdrawal from your checking account if it is an online loan company or have you post date a check until your next payday with the storefront companies.
If you are using an online loan service, be very careful that you understand the terms of the payback of the loan.
Most online loans will automatically take out the service charge and the interest on the loan every payday but will not take any of the principal out of your account unless you specify they do so within 3 days of your due date.
For example, a $500 loan will cost you $650 to pay off, but if you do not specify they take the $650 out of your account on your first due date, they will only take out $150 and you will still owe them the $650 on your next due date.
So in essence, you just paid $150 to borrow $500 for two weeks.
The interest and fees can be quite high, but if you pay these loans off in full on the first due date and do not extend them in any way you will be fine.
The Payday Loan Trap
When a person does not pay off their payday loan on the first due date, and then chooses to extend the loan or even take out another loan to cover the first payment is when things can really go bad fast.
Interest rates can pile up at an incredible rate and within a couple weeks drive up the payoff on the loans out of reach of the borrower.
The loan company will still be submitting a request for payment to the borrowers bank, and now we have a situation where the bank account is overdrawn.
As you can see this can spiral out of control at the speed of light and the borrower becomes caught in the payday loan trap.
If you feel you must use these services, follow the above directions for taking the loan out and paying it off in full and you should be OK,
Do not in any way extend these loans for any reason, as you will be opening up yourself to some serious consequences.
We here at Help With payday Loan Debt are glad to be able to help you with using these services safely, and if you have already gotten yourself in trouble with payday loan debt we can help you in that area too.
We hope this payday loan advice helps you in any dealings you may have with these companies and keeps you from getting caught in the payday loan trap.