How Payday Loans Can Send You Into Debt

Payday loans can be extremely helpful to people in a time of need, but if not used responsibly, they can have a very negative affect on your personal finances. 

What exactly is a payday loan?

Payday loans, sometimes called payday advances, are short term loans that are usually between $100 and $1500. They are loaned over a short period of time and can often come with a high interest payment.

Why do people get payday loans?

People turn to these small cash loans when they need cash quickly. Whether they need money to fix their car or to pay medical bills, they can easily get approved for a small loan to take care of their problems. 

How do you get a payday loan?  

Short term loans can be secured two ways, online and in person. With advances in banking and technology, it is now easier than ever to fill out a loan application online and get the money direct deposited into your bank account within an hour.

How can a payday loan negatively affect your personal finance?

If you happen to be getting a payday loan, chances are you are currently not in a good financial situation. You most likely to not have a large amount of money in your checking account and need a payday loan to take care of a large outstanding debt.

Since payday loans do not require a credit check, they are frequently lent to people with bad credit and have a track record with not being able to pay their bills on time. Payday loans often come with escalating interest rates. Escalating interest rates rise after you miss a payment.

This presents a deadly combination, loaning money to people with a bad track record of paying bills on time and having ever increasing interest leads to one thing and on thing only, debt. 

How can people be more careful to stay out of debt?

The most important thing when considering payday loans is to be responsible. Do you research and find low interest payday loan providers, know when you have to make payments and if you will be able to make those payment.

Another way from falling into debt is to make sure you are getting a payday loan for the right reason. If you happen to be looking to buy new rims for your car or need money to go on a vacation, then a payday advance is not right for you. Short term loans should be saved for emergencies and not general shopping trips.