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You've seen the commercials. Cute characters promise financial prosperity. Happy, professional individuals appear to regularly visit their corner pay day loan shop as proudly as cashing a check at the bank. Customers at the grocery store all recommend pay day loans as the easy solution for a lack of funds.
WHY USE A PAY DAY LOAN?
Some individuals reason that paying a bill with borrowed money is better than receiving bad credit marks because of not paying the bill. This is understandable. However, some financial institutions are willing to make the occasional exception if contacted about the situation. Or there may be a small fee, but not a credit report made.
Using it for groceries or other items? Consider the true cost before making a decision. Compare the cost of using a pay day (or cash advance) loan to the fees charged for taking a cash advance on your own credit card. Can family help? Often those who are forced to use pay day loans are not able to repay the loan by the next pay check and that can lead to a cycle of debt and stress.
WHAT IS THE COST?
Several sources, including a consumer report by the FTC (Federal Trade Commission) and the CFA (Consumer Federation of America) state that the usual APR is between 350 - 650% with some as high as 780%!
A loan of $100 ranges in cost between $15 - $30. If the loan is not repaid by the pay date then it can be renewed with another fee due at each renewal. A loan of $100 can cost $60 in fees after 3 renewals.
WHO BENEFITS?
Based on the warnings issued by federal and consumer organizations it is clear that using pay day loans or cash advances from these businesses can often lead to more debt and problems. Some sites were reported to automatically roll over the loan and only withdraw the renewal fee on the pay date. Other sites surveyed by the CFA required customers to agree in contract to not participate in class action suits or to file for bankruptcy.
For those who are having debt problems it is recommended to seek no- or low-cost credit counseling from a local non-profit organization. These organizations can help with reducing current interest charges and lowering monthly payments. If the problem is budget, you should look to a financial planner who can help you to manage the money you do have and avoid using credit at all.
Pay day loans are well and good for satisfying financial needs at a short notice especially for emergency purposes. If you are not careful, however, you can either be scammed of your money by unscrupulous lending companies or be engaged in a vicious cycle of re-financing your cash loans. Fortunately, you can avoid taking out pay day loans at the very last moment through these alternatives.
Talk to Your Creditors
You will be pleasantly surprised at the helping hand creditors like utility companies are willing to extend to their clients. The best things about being upfront with your creditors about your temporary inability to pay are that first, you will not be reported to the credit agencies and second, you will be provided with grace periods with which to comply. These, in turn, ought to provide you the time to earn more money to pay your debts.
Earn Extra Income
Often, additional sources of income are within our reach except that we fail to see these opportunities for what they are. You can conduct garage sales of your old things, cash in on a hobby or a talent, start a home business with little capital like weekend household cleaning services and offer your professional expertise around the neighborhood and the office. The important thing is that you can avoid taking out pay day loans as much as you possibly can.
Secure an Employer Cash Advance
Instead of risking money on fraudulent pay day loans companies, you can ask your employer for a cash advance on your next payday. If your employer grants cash loans payable over many periods, you will be able to save money on lending costs as well as lessen the impact on your monthly paychecks.
Use Your Credit Card
Your credit card will often have lower interest rates than payday advances. Of course, you still have to pay for your credit card purchases and cash advances so there really is no escaping the debt problem.
Exhausted All Means
However, when you have exhausted all the means to avoid pay day loans and yet the emergency financial problem still remains, and it will what with the recession, then it is time to avail of these loans. It's fast, it's easy and it's handy, which cannot be said of the abovementioned alternatives.
The trick is in looking for the legitimate lending company that offers relatively generous terms for its clients. You have to be able to re-finance your loans without too much ado in the same way that you can pay your loans before the repayment period. The important thing is that you have a job with which to pay the loans when the time comes.
The above-mentioned alternatives, specifically earning extra income, ought to complement your efforts to settle the loans in full. Soon enough, you will find that these cash advances on your paychecks are temporary in nature.
And you will also discover that payday loans are indeed your good friends in bad times, second thoughts notwithstanding!
Money Loans Company - Payday Loans and Cash Advance
20 Eglinton Ave. East
Toronto, Ontario, Canada
M4P 1A9