Why an Emergency Payday Loan Might be a Bad Idea

Most everyone, at some point in their lives, will find themselves in need of cash fast. There are a variety of reasons why you might end up needing money quickly. Many people end up needing quick cash when their vehicle breaks down, or when they're facing an unexpected home related repair or bill they cannot afford to pay. These days, there are companies that offer payday loans for people with emergency financial needs. These companies promise to loan you the money you need quickly and with no credit check. It sounds good, sure, but the truth is that an emergency payday loan might be a bad idea.

Whether a payday loan company exists online or at a physical location, they all basically work in the same way. While there's no credit check, you will be asked for information regarding your identity and income. Some loan companies will ask you to provide proof of your income in the form of paycheck stubs or a letter from your employer. Others will call to verify that you work where you say you do and make what you say you make. Because the company wants to make sure you can pay the loan back, it's usually required that you earn at least $1,000 per month. You might also be asked for references, not only to confirm your ability to repay the loan but to provide an alternate way to reach you if you disappear without paying.

Speaking of paying, you will pay big with one of these loans. Fees for a loan can range from around $15 per hundred dollars borrowed to much, much more. Different companies charge different rates, but most all of them are pretty high. The longer you keep the loan out, the higher the charges go. It's not uncommon to borrow $100 but end up paying $500 or more before all is said and done. Or more. Many people who take out these types of loans pay much, much more in interest rates and fees than what they borrowed.

If you decide to take out an emergency payday loan, be very clear on the amount of money you'll be required to pay. Also, try to pay back the loan as fast as possible to avoid more expensive fees from being tacked on as time goes by. Make absolutely sure that you can afford to make the payments, because one thing you won't get from these companies is sympathy if you can't pay!

Copyright 2006 Jim Sterling - All Rights Reserved

 

 

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