I know what loans are but what makes them so much worse?
Edit: thank you everyone for Answering! I think I got it now 🙂
In: 32
Some of them gave you a loan until the day before payday. Get paid every other Friday loan was due on Thursday. You would be charged late fees for the one day.
I have seen places that charge you $15 per $100 for a one week loan.
Some of them gave you a loan until the day before payday. Get paid every other Friday loan was due on Thursday. You would be charged late fees for the one day.
I have seen places that charge you $15 per $100 for a one week loan.
They’re hated because they generally leave the borrowers worse off than had they not taken the loan at all because the interest rates charged on them are so damn high. For instance, if you owe $1000 in bills and you take a payday loan for them, maybe you’ll get caught up on your bills for that month, but now you need to pay the loan company back $1200. So you’ve only temporarily gotten caught up on your bills and owe much more than you borrowed.
They’re hated because they generally leave the borrowers worse off than had they not taken the loan at all because the interest rates charged on them are so damn high. For instance, if you owe $1000 in bills and you take a payday loan for them, maybe you’ll get caught up on your bills for that month, but now you need to pay the loan company back $1200. So you’ve only temporarily gotten caught up on your bills and owe much more than you borrowed.
You sign away next week’s paycheck to a company, and they give you money but they keep like 10%. The term is usury. It’s actually in the Bible. If you let someone borrow money, you don’t charge them absurd interest.
You sign away next week’s paycheck to a company, and they give you money but they keep like 10%. The term is usury. It’s actually in the Bible. If you let someone borrow money, you don’t charge them absurd interest.
Payday loan companies have been referred to as legal loan sharking.
Payday loans are shot term loans, the idea being that you can borrow money to hold you over until your next payday when you can pay it off, hence the name.
They have a bad reputation because payday loans are predatory. They focus on people in financial trouble with poor credit and have very high interest often over 100% annually. They are meant to prey on people with bad finances and/or have poor financial management skills who are very likely to be unable to pay the loans back or don’t understand what they are getting themselves into.
Failure to pay back such a high interest loan will result in a debt spiral that’s very hard to get out of. You have to keep re-borrowing money from them just to pay off the interest.
My former boss used to work for one of these companies and mentioned the slogan used by management was ‘forever in debt’ because that’s what they are aiming for with their clientele…
Payday loan companies have been referred to as legal loan sharking.
Payday loans are shot term loans, the idea being that you can borrow money to hold you over until your next payday when you can pay it off, hence the name.
They have a bad reputation because payday loans are predatory. They focus on people in financial trouble with poor credit and have very high interest often over 100% annually. They are meant to prey on people with bad finances and/or have poor financial management skills who are very likely to be unable to pay the loans back or don’t understand what they are getting themselves into.
Failure to pay back such a high interest loan will result in a debt spiral that’s very hard to get out of. You have to keep re-borrowing money from them just to pay off the interest.
My former boss used to work for one of these companies and mentioned the slogan used by management was ‘forever in debt’ because that’s what they are aiming for with their clientele…
Most of the comments are close but off (at least here in Canada)
They’re meant to be short term loans that you pay back on your next payday with a high interest rate (roughly 15% depending on your province)
While it’s now illegal to do a rollover (just pay the interest and reloan again. Basically stuck in a cycle of paying only the interest) what a lot of ppl tend to do is either pay it off and reborrow – meaning yoyre paying that high interest rate on each of your paydays, or do a separate payday loan elsewhere to pay it off. Now you have more loans to pay.
And it becomes a vicious cycle like that where it’s hard to get out.
Most of the comments are close but off (at least here in Canada)
They’re meant to be short term loans that you pay back on your next payday with a high interest rate (roughly 15% depending on your province)
While it’s now illegal to do a rollover (just pay the interest and reloan again. Basically stuck in a cycle of paying only the interest) what a lot of ppl tend to do is either pay it off and reborrow – meaning yoyre paying that high interest rate on each of your paydays, or do a separate payday loan elsewhere to pay it off. Now you have more loans to pay.
And it becomes a vicious cycle like that where it’s hard to get out.
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