When you are in debt and struggling to make ends meet getting a payday loan to help you to cover your expenses may seem like a good idea. After all, it’s a lifeline that you can grab onto when you really need the help. The problem is that a payday loan isn’t a solution. It may help you to put food on the table or pay your rent today, but in the long run, it isn’t going to help you to improve your financial situation. In fact, it’s going to make your financial situation worse. That’s right, you may feel better today because you can cover your bills, but that feeling won’t last. In the near future your money problems will return, and then what do you do? You probably go and take out another payday loan, then you do it again when your money runs out.
Payday Loans Fuel A Cycle Of Debt
This is the cycle that the payday loan industry wants you to fall into. How does that cycle work, and how does that cycle keep you trapped in debt? The best way to illustrate this is with a simple example. Let’s say that due to an unexpected bill or a loss of hours at work caused you to be $300 short of being able to pay all of your bills this month. So you go out and get a payday loan. When your next paycheck comes you don’t make a small payment toward the $300 you owe, you have to pay back the full amount, plus interest. The interest on payday loans is extremely high, so it’s not unreasonable to expect to have to pay $350 back. So, your paycheck is now short $350, what do you do now? Unless you have a way of earning that money, you are going to be unable to pay your bills this month. So you head back to the payday loan store and take out a loan for $350. Then, next month comes along, and once again you can’t pay your bills, forcing you to take out another payday loan. This is the cycle of debt that the payday loan industry perpetrates, and it’s why payday loans should never be an option you are considering.
Payday Loans Take Advantage Of People Who Have Few Other Options
Given the predatory nature of payday loans, you may be wondering why people turn to them in the first place. The answer is simple, desperation. When you can’t pay your bills, and you have no other means of getting the money that you need, a payday loan may seem like the helping hand that you need. Payday loans target people that can’t get other types of loans due to credit problems. Since payday loans don’t run your credit they are one of the few lenders that will give people with bad credit a loan, which makes them the only real option for people that are in a desperate situation.
What Other Options Should You Consider Besides Getting A Payday Loan?
The best way to avoid money problems is to be proactive. That involves earning a good wage and budgeting properly. If you do find yourself unable to meet an unexpected bill try to work out a payment arrangement of some type with them. Or, if possible try working some overtime, or picking up a temporary job. Just about anything you try is better than being forced to take out a payday loan.