Payday Loan FAQ
General Information about Payday Loans
Advantages of Having an Payday Loan
Disadvantages of Having an Payday Loan
General Information about Payday Loans
Payday Loans are loans you can get to spend on anything from food to computers. Payday Loans are usually for much less than other loans are for. Payday Loans are usually for about $150 and can be given up to 15 days before your next scheduled payday. The way they work is you bring the company giving the loan a current pay-stub and then you write the check for the amount you want plus the service fee to advance you the money. Then the company holds to check for as long as you tell them to (usually up to 15 days) and then deposits the check into their account and that would take your pay for the week, but you would have the advanced pay. The problem with getting these cash advances is the service fee is usually very high and around 20% so if you wanted a $100 advance you would have to give the company $120. The reason the fee is so high is that this is a very risky business for the company because they have to believe that the $120 will actually be in your bank account and that you will not block the check you gave them from being cashed or deposited. The companies have to keep this large service fee to make up for the money they do not receive. If your check does bounce or is blocked they will try to track you down to get their money, and it will hurt your credit report and ruin your chances of getting a cash advance in the future so you cannot just get a cash advance and then bounce the check to get free money because it will not work.
Advantages of Having a Payday Loan
These loans will allow you to take out a small loan (about $150) to buy anything you want now and then pay for it later. The loan simply advances you your pay. These loans can be good if you are just a little short on money to pay rent or a bill that is due or to buy something that cannot be bought later if the service fee is less than the money you will save by not waiting until you are actually paid at your job saving you the cost of the service fee.
Disadvantages of Having a Payday Loan
The disadvantages of getting a payday loan are that the service fee to get the loans are extremely high causing it to cost you $20 to get a $100 payday loan. The reason is that as stated in the general paragraph there is a large amount of risk involved with giving this type of loan. These loans should only be taken if there is no way what you want the loan for can wait until you are paid, or if you can save money by getting it. Here is an example of how you could save money: you need a new table, the table is on sale this week for $100, and it is regularly $200. Then, it would be worth the $20 fee because you are still saving money. In that though if you had a credit card it would be cheaper to put it on your credit card, get the $100, and not have to pay the service fee. In short these loans should only be used if there is no alternative to get what you need by either waiting until payday or using another form of payment.
