Antonio J. Miller
In the tough world of living from pay check to pay check, sometimes there just isn’t enough money to make it until the next one. Sometimes, even the most responsible, hardworking individual can’t stretch their money any further. Without a major credit card and since it is hard to save with rising costs everywhere, the need might arise for an emergency funding source.
What Exactly Does This Service Provide?
Many borrowers have their credit checked to determine their worthiness. For example, when you purchase a home, you put the house itself as collateral. If you fail to pay for the home, it can be taken away from you. This type of secured borrowing is common in many situations. In the world of credit cards, penalties are often given to those who make payments late and in some cases, their interest rates can be raised or their credit limits lowered.
In the case of payday loans, an unsecured, short-term borrowing situation is created where the interest rate can be extremely high. In some cases, the interest due can exceed well over 1000%. There are some who claim that this type of lending is predatory and takes advantage of those who have lower incomes and less access to more conventional types of credit. This has been widely debated in many countries. Some countries have introduced legislation to ban the extremely high-interest rates and make the practice more affordable. This has been met with intense backlash from those in the industry desiring to keep their profit margins.
By obtaining one of these loans, one can expect to be approved, but the promise of the money returned with a high-interest rate is also expected. For people living in a fixed or lower income, this can create hardship, making it difficult to pay back the interest while still maintaining the same bills that need to be paid when the money comes in. This can lead to a high risk of default by the borrower.
How Can I Protect Myself?
One of the best ways to make sure that you can handle the interest and payments is to read all of the fine print associated with your transaction. While sometimes the urgency of needing money can make one just want to sign and get on your way, like any contract you should take the time to read the fine print and ask about anything you’re unsure of. Making sure there are no hidden fees or other items in the document before signing is always the best decision. Even though it’s unsecured, it is still a loan.
If you find yourself unable to make the payment, it’s best not to wait until you get deeper into debt. Visit the lender and discuss your situation with them. Do your best to make the payments on time and once you have completed the terms of the agreement, make sure to get that in writing so you can keep a copy for your records. With any financial transaction, knowing what you are getting involved in and being informed is the best way to handle the situation.