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Sometimes when things become a little tough we do things without too much thought Usually because we want to put the tough thing behind us and move on This can result in jumping in on payday loans and regretting it later Payday loans arent all that evil as long as you know what youre getting into and you take some time thinking about actually doing it and how youll later terminate the loan

To begin with payday loans arent always a good choice Dont get tricked by the ads from the mall radio television or Internet Even if you desperately need some cash until your payday you should consider all the alternatives first In my opinion a brief definition for payday loans is expensive cash

Payday loans are short-term cash loans The amount of money that can be borrowed regularly ranges from $100 to $1000 and it depends on the laws of each state The average term is about two weeks Payday loans are made by check cashers finance companies payday loan stores and others They are also designated as cash advance loans check advance loans deferred deposit check loans or post-dated check loans

This is how it usually works the borrower writes a personal check for the sum borrowed plus a fee and he receives the amount he or she wishes minus the fee Fees are regularly a percentage of the value of the check but they can also be a fixed value charged per a specific amount like $15 for each $100 borrowed When the next payday comes the borrower can redeem the check for cash Otherwise he can pay the finance charge again and roll the loan for another two weeks

To get an idea of how expensive payday loans are you must know that this type of loan costs on average 470 APR annual interest while the APR a credit card is rarely higher than 60

Lets assume you want to make a payday loan for the amount of $300 the loan fee is of $1750 per $100 and the loan term is 14 days Therefore in order to redeem the check you have to pay $35250 when the 14 day period is over You can pay it by cash or you can allow the check to be deposited at the back If you still dont have this money you must pay the fee of $5250 to renew the loan for another loan period This means that borrowing $300 for a month will cost you $105 Thats not cheap at all By comparison a $300 cash advance on an average credit card repaid in one month would not cost you more than $15

All you need to get a payday loan is an open bank account and a steady source of income However lenders are not necessarily interested to find out if the borrower can afford to repay the loan If you dont pay the loan it becomes an uncovered check in your bank account If you fail to repay it you will get a bounced check fee from the lender and from the bank You will receive negative ratings on specialized databases and because of this you might lose your bank account and have difficulty in opening a new one

Because of the very high cost to borrow and the short repayment terms the consumers sometimes tend to be trapped in repeat borrowing cycles Reports show that almost 60 of all loans made every day are either loan renewals or loans taken out by the same consumer immediately after paying off the last one

Payday loans with three-digit interest rate are prohibited in twelve states in the USA where they are considered to be small loans or usury caps

The internet payday lending has become very popular lately You can apply online and loans are directly deposited into your bank account When the payday comes the amount of money youve borrowed is electronically withdrawn If you choose to renew the payday loan the finance charge is electronically withdrawn from your account

Here is a suggestion in order to avoid getting a payday loan First of all shop carefully If you really need that money try to get an advance on pay from your employer or borrow the money from family or friends at least you can do this for free usually Figure your daily and monthly expenditures and try to avoid unnecessary purchases You should also build some saving so that there will be no need to borrow money for unexpected expenses or emergencies If you still decide you want to use a payday loan make sure you dont borrow more than you can pay with your next paycheck