Payday Loans Will Drag You Into A Financial Quagmire

If you want to know what a payday loan is, it is almost an instant loan that is taken for meeting your immediate financial needs when you are temporarily facing a shortage. Since it is a cash advance paid as a short-term loan, you are expected to pay it back at the earliest, may be, within a fortnight or so. Usually, this loan involves only a small amount of cash. You may be asked to write a check for this amount and leave it with the lender. The lender will be cashing this check when you have enough cash in your account to pay the loan back. But, it should not take too long for paying this loan back. If you are not able to repay it within a reasonable period, you can request the lender for rolling the loan over for a few more days. But, before requesting for such an extension, you must remember that the lender may increase the interest rates steeply due to this.

The most important point you should note is that these payday loans are very expensive. Lenders charge exorbitant interests on them. You may think that this short-term loan will solve your immediate problems but the fact of the matter is that it will add to your financial woes.

The first point against payday loans is that they come with very high rates of interest. The second disadvantage is that it does not give you a breather when the question of repayment comes. If you are not in a position to pay it back within the agreed period, which may be a fortnight or so, you will be forced to pay more interest. Due to this, the loan will multiply manifold. If you make it a practice to borrow such payday loans frequently, you are dragging yourself into a quagmire.

The main mistake we commit is that we assume that events will take place according to our plans. If something goes wrong, all our financial plans go awry and we will not be able to pay back these payday loans on time. Another problem is that if we keep bouncing the checks we issue when we take these loans, it will be viewed seriously by our banks. Your credit score with the banks will get a beating. So, you may not able to get further financial assistance either from banks or from other lending institutions.

The best solution to tide over your immediate financial needs is to take help from close friends and relatives instead of taking such payday loans.

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