According to CareerBuilder.com, a whopping 61% of American households lived paycheck to paycheck in 2009. That number is huge, especially since only 49% lived that way in 2008, and only 41% in 2007. Whether it is due to losing one or both household incomes or simply a reduction in the household incomes, the statistic is staggering. With families not able to adequately save for any unexpected expense that may arise, they are finding that more often than not there is more month than money. So what happens when the rent/mortgage payment is due, groceries need to be purchased, and then the car breaks down? For some, a small personal loan at a local bank is all it takes to get back on track. For many though, this isn’t an option, and they only place they have to turn is payday lending, which may sound like a good idea up front, but in the long run can sink you deeper than you were before.
What is a Payday Loan?
At its simplest, a payday loan is simply a small, short-term loan meant to cover the borrower’s expenses until their next payday. They have many different names: paycheck advance, payday advance, and cash advances are the most popular when referring to payday loans, but the basic concept is the same. The borrower visits the payday lending store, secures the loan – $500 is the average loan – by providing proof of income, their Social Security Number (SSN), recent bank statements, and other personal information, and writes a post-dated check to the lender for the amount of the loan plus all loan fees.
That sounds pretty good, right? Go in, apply, leave with money the same day; what could be better? A lot. For starters, on the maturity date of the loan – usually within two weeks after the loan is approved – the borrow...
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...han one loan at a time, and don’t use a payday loan for everyday expenses, to pay down credit card debt, to pay off another payday loan, or to try and solve a long-term financial challenge. Payday loans are meant to be used for emergencies, not to fund your shoe fetish or video game habit.
Payday Lending: The Bottom Line
Although payday loans walk a fine line between beneficial and detrimental to your financial health, by being a responsible borrower you can avoid the payday loan roll-over cycle. Know the laws regarding payday lending in your state. Be sure you know the terms and repayment schedules of the loan, and only borrow what you know you can afford to pay back. Only use them as a last resort after exhausting all other possible options. But better yet – avoid payday loans altogether, try to live within your means as best you can, and save, save, save!
I 'm warning you that this will require a change in your behavior. Using this method is powerful, but it means that you won 't be able to buy new clothes, tools, or toys whenever you want. It also means that you will be moving quickly towards a debt-free life where you don 't have to feel guilty and stressed about how much money you owe.
Let me tell you something about Payday these are the loans which will be approved within very short time called just within one hour.
Payday loans were created with the intention to assist people in times of financial need, for the short-term, with the promise to be repaid by the next working paycheck. In addition, payday loan companies such as Cash Connection even helped struggling people who didn’t use banks as a way to increase access to their services, in effort to convince nearly every type of person that they could benefit by pulling out a short term loan. This was a beneficial, ethical approach because during 1995 to 2003, banking overdraft fees nearly doubled and banks refused to serve individuals who sought payday loans, making payday loan companies the optimal choice for short term financial services. Nonetheless, the concept of assisting people in times of need and financial struggle at their convenience is an ethical approach with good intentions.
This blog post describes research on the effect of limits on payday lending. It notes that a study by Harold Cuffe and Christopher Gibbs has found that such restrictions not only restrict the number of payday loans being made, they also significantly reduce sales at liquor stores, particularly for those within 33 feet of a payday lender.
Payday Lending (sometimes called cash advance): The borrower uses a post-dated check or electronic checking account information as collateral for a short-term loan. Borrowers need only personal identification, a checking account, and income to qualify.
Do you have bad credit? You are exactly the kind of person that payday loan companies are happy to lend. Most of the time, they do not check their creditworthiness because they know you're desperate and sign their forms without reading them all. It speeds up the process of withdrawing money in hand, but it locks you on their terms. Please read their form carefully before signing and if you do not understand anything ask for explanations, this is your right as a buyer, so if they try to push you - go away. Get trained and get help from someone you trust who has experience reading legal documents.
Prior to agreeing to a payday loan, it is important that you aware of and agree to all the terms. Even if you need the money badly, you need to know
Make a plan to pay off student loans and credit cards. A large debt can be intimidating, but the debt can be paid in small increments on a weekly or monthly basis. Every month,
That being said, there are plenty of alternatives to microfinance, many of which I would be glad to endorse as effective means of
Taking out a loan can be very complex at times. Loans are usually at fixed terms at a fixed rate. While banks will make loans with variable or adjustable interest rates and borrowers can often repay loans early, with little or no penalty. They usually don’t like doing it that way because they make no money if you repay your loan early, because they make interest off your loan that you take out. Just like a credit card, you use your credit card for a lot of money and you pay that credit card off that month you aren’t losing any money because there is no interest on it. The banking isn’t winning nor gaining anything.
I. Main Point 2: It is important to pay your credit card balance off every month. If you do
You should be aware that since these types of loans are not as strictly regulated as other loans, such as payday loans, there is no cap on the amount of interest you could end up paying. This could mean you will pay back much more than you originally borrowed and it could be hard for you to repay the loan. If you are unable to make the repayments, than your guarantor will be responsible for paying back the money you
...f these financial problems is to read over the regulations and payment guidelines. It has become a necessity for all borrowers to research and be aware of what the credit card company’s want and will do as a consequence to late payments. By not educating themselves, borrowers will be scammed into spending more money then they originally intended to. As long as these consumers spend their money wisely and properly the credit card can work in their favor but until then people will continue to be in debt and spend their money in am unjust manner.
Microcredit should not be mixed with microfinance, which addresses a full range of banking needs for the poor people. As the financial services of microfinance usually involve small amounts of money – small loans, small savings etc. – the term "microfinance" helps to differentiate these services from those which formal banks provide.
...ower to wait a year or before to start to make the repayment. Somehow, some loans can be repaid at the end of the period instead of instalments. Besides, security, for example some assets and the properties of the business, is needed for the bank loan. There are three advantages in the bank loan. First, the timing and the amount of the repayment is known when getting the bank loan, so it is quite easy to budget. Second, there is also a repayment holiday, so the repayment schedule is quite flexibility. Third, the interest rates can be discussed and it can be lower than the overdraft. However, it is because the business loan is a long-term commitment, which is needed to service and this will be to high interest rate. Besides, security such as the house of the business owner is needed and this will not be good to the owner if the business is failed. (Cox, Fardon, 2009)