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
Payday loans are easy to apply for and get approved for as long as you have a reliable paycheck. People hate them because they’re super predatory with a system designed to keep you dependent.
Example: you borrow $500 until your next paycheck. Then you have to pay back $575 because of interest. Which then leaves you having to borrow again to get through the next two weeks, the cycle continues, etc.
They’re predatory because they’re marketed towards people with credit too low to access traditional lending with reasonable interest rates. And then they abuse that power by spiking the rates which make it impossible to get out of the cycle.
My credit score is 720 – I have access to loans at 8% interest. Someone who’s credit score is 520, doesn’t so when they’re short on money all they can do is turn to payday loans that charge 120% interest. And they’re stuck in that loop with no way to get ahead.
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