Avoid Payday Loan Pitfalls
The FTC released an alert about payday loans and their high long-term costs. They walk you through the expenses related to payday loans if you do not pay them off immediately.
The FTC explains that the expenses related to payday loans if you do not pay them off immediately. For example, due to the high risk of the loan to the lender, they may charge $15 on a $100 debt. That amounts to 15%. If you?re in need of money quickly, then that fee appears to be reasonable. However, if you decide you need more time to pay off your debt, you may have to pay another $15 to extend that debt. So, if you go a long time without paying off the debt, the interest rate you?ll end up paying is very high. The upside of payday loans is that they tend to be fast and easy to get, which can be seen as a great benefit to some people.
The FTC is urging people to consider all of your options before you get a payday loan:
* Get a small loan from your credit union or a small loan company.
* Contact a credit counseling service if you?re having trouble working through the details by yourself.
* Do you really need to get the loan in the first place? Decide whether your expenses are realistic and whether you can go without instead of taking on the loan.
Resources:
Lisa Pawney writes about loans at the loans personal credit website.
Author: LoansCredit022
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