Definitely, the idea to take payday loans is pretty interesting since you can get a hefty sum of money quickly. The money can be used by you to fulfill any immediate needs when you did not have any money to do so. However, take this kind of loan can actually be harmful to you. Here are the reasons why you should not take them.
- They are very expensive to pay
The first reason why should not take this fast cash is that the amount of money you have to pay to the loan lenders is usually extremely high. Well, if we are talking about the interest you need to pay for this kind of loan, we need to check out the interest rates that most credit cards would have. Usually, a credit card would have an interest rate which may be as low as 15 percent or as high as 36 percent only- pretty high, but still reasonable. On the other hand, the interest rates of the loans we are talking about can reach up to ten times than the interest rates of a credit card. One day, you get a loan of USD 100 and its interest rate is USD 15 for 10 days. The annual percentage rate, then, would be as high 400 percent of the loan!
- They are very likely to trap you inside an endless loop
The next reason not to take this kind of fast cash would be the fact that you would be stuck in a repeat cycle without an end. Well, this one would be less likely to happen when you get loans from reputable lenders since they would always have a database to prevent you from having a rollover, but you will still need to be careful, nonetheless. By the way, 76 percent of the loans are to pay off the payday loans that are older. On average, borrowers tend to stay in debt for more than six months or half a year, exceeding the two-week time- a common time available to pay off the loans.
- You would be drowned in debt
By getting this kinds of loan, you might not be able to improve yourself and your debt would become a lifelong burden when you made any small mistakes. The reason why it could happen is that debt grows extremely quickly at the rates mentioned in the first point of this article. With extremely high interest rates, it would be possible that your loans will be quadrupled in just a single year.
- The day to pay off your debt would be unpleasant
You have already known that the money you would need to pay to the lenders would be extremely numerous. Well, to make matters worse, you would not like it when the day you really have to pay the debt since most companies which offer this kind of loan also have debt collection practices. Fortunately, they would not do anything to harm your life thanks to several regulations which protect you from such acts. Now, you understand why taking payday loans is not a good thing to do!