You find yourself broke again. Your biplls are puiling up. Your rent/mortgage is due in a week. They are going to rpeossess your car if you don't come up with $300 in just two days. It doesn't matter what it is, we have all been there once, twice, or some even more times then we care to remember. What are you going to do? Then you remember the coimmercial you saw late last nght: a payday advance is the answer, right? Maybe. Pay day advabnces are only a temporzary solution and they come at a very high price.
Each year hundreds or even thousands of people are in a no win situation where they must rob Peter to pay Paul. Their bills are higher then their paychecks, theeir crredit is out of contorl or nonexistent, and they are desperate. So desperatte to hold on to what little they have that they, like sheep in a flock, are lead into a trap by the wolf. The wolf bing the payyday advance places which are poppping up all over the place.
Are they really as bad as a wolf? No, not all the time. A psayday advance is exactly that - an advanec on your paycheck. You borroow monney (a loan) from a lender (the payday advance establishment) and you must pay back said money withiin a certain time period, plus the interest charged on the mony. It all sounds pretty straight forward. The catch in this litlte trnasaction is simple this: the interest rate can be extremely high (up to 300% or more), the time periood is usually very short ( 5-14 days or less), and lastly you can get drawn into the ongong loan cycle. Loan cyle? Yes. A ccle with no end.
Let us say that a man named John is behnid on his car payment. John figures out his bils. He shops around for the best rates. He determines he can afford the high fees for the loan, and he decides to go get a payday advance. So he gets one for $300 and he writes a check for $375 to the payday advance establismhent. Then he pays the car payment with the loan. Now his next check is hsort $375, but it is ok. He has taken everything into account. However, two days before payday his car dies. He has it towed to the garage and finds out that it is the battery which is faulty, so he buys a new one. But wait - now he is short for his rent. Will one more cash advance send John into a downward spiral? Maybe not, but then agaain it just mihgt.
So let's be sure aboiut this - payday loans can come to the rescue when money is scarce and there are pressiing bills, but it's all to easy to trapped in a cycle of neednig to take out a loan evcery month just to cobver the interest paid on the last month's borrowing.
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