If you are thinking about taking out a payday loan because your paycheck was not enough for you to cover your car note, mortgage or electric bill this month you might want to reevaluate your decision. On the surface, payday loans seem like the perfect solution. They make it possible for you to borrow the money you need without having great credit. All you have to do is make sure the money to repay the lender is in your account when it is time for them to receive payment. Simple, right?
No! There is a dark side to payday loans you should know about. If you are not careful, you could end up digging a deep financial hole for yourself. Here are some things for you to consider before you apply for that loan:
What happens if you cannot repay on time?
Many people in Harrisburg assume repayment is not going to become an issue. Surprisingly, it does. Payday loans are structured to benefit the lender. In exchange for a short-term loan, you, the borrower, must agree to repay the principal plus a high-interest rate and fees. If you repay what you owe on time, the lender profited from the interest they charged you. If you do not repay, the lender makes money on the penalties. They can also pursue you for years until you repay them or you file for bankruptcy.
Are you going to be able to stop?
One tactic many borrowers use when they fall behind on payments is to take out more or extend their payday loans. The money helps them to stay afloat financially, making it hard for them to make ends meet without them. It is a vicious cycle that can land you deeper in debt because the amount you have to repay continues to get bigger.
Payday loans may seem like the best solution for your situation, but it is not. It is best for you to examine alternatives that do not come with so many risks like borrowing from a friend, relative, credit union and bankruptcy.