The Danger of Short Term Loans
With the numbers of the unemployed continuing to rise, despite a short breather during the Christmas season, more and more families and individuals are facing difficult economic hardships they were previously unaccustomed to. One solution for many has been to look for emergency short term loans. The loans have proven important for many families, but do have issues associated with them that every potential customer should be aware of.
The payday loan store that you see on the street, or the payday loan company that you receive unsolicited emails from may seem like a good idea for those who need a little extra money to get themselves by until their next pay check comes. However, the punitive contract details within a payday loan arrangement often make these styles of monetary "assistance" into a cycle of debt that a low-income earning individual would be hard-pressed to break out of.
These short-term loans are often targeted at people on lower incomes, and promise them easy access to money with little consequence. They rarely advertise the high rates they charge on their interest, but it can be extremely high. While losing ten dollars on every hundred loaned may seem like a fair amount in order to access money immediately, that fee may be compounded on a weekly or monthly basis rather than annually, which could add up to a very large amount, if the original loan is not repaid in full.
Of course, to repay the loan, the majority of companies will take money out of the lendee's next pay check. Sadly, this often leaves the person will less money than they need for their expenses, which will send them back to the payday loan company once again to cover the extras.
So, what's a person to do? If you are short on cash for an unexpected emergency but are otherwise able to pay your bills, a one-time usage of the system, while costing you more in fees, might be to your advantage. However, a continuing reliance on these stores to cover shortfalls would indicate an income that simply is not matching household expenses.
Rather than going to a cash advance company, you might be better off speaking with a financial advisor on how to lower your expenses or raise your income levels. These companies are not evil by any means, but their system of business allows for a level of exploitation that could lead to large debts, and ultimately, bankruptcy, if left unchecked.
About the Author
Jacob Lumbroso is a world traveler and an enthusiast for foreign languages, history, and foreign cultures. He recommends http://electronicairpurifier.org/ for anyone struggling with allergies.
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