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Saturday, August 11, 2012

How Payday Loans Work



I read a lot of posts about payday loan and here in the US, this business can be found anywhere in town, offering a loan for those who can't make ends meet. It is also referred to as cash advance or pay day advance. Some people really have a hard time with expenses and some are just spending here and there so they end up loaning money.

As a mother and wife, I spends my husbands salary wisely. I spend according to my budget and never think of applying for a payday loan in the future. Applying for a payday loan is not a good practice and can be prevented if you just know how to spend wisely. The company is after the unwise spender desperate people who always turn to them before the next payday comes They made the application convenient to attract people getting the necessary funds they needed.

Only those employed can avail of payday loan. The basic loan process involves a lender providing a short-term  loan to be repaid at the borrower's next pay check.  Employment verification or income ( pay stubs and bank statements) is required, but some lenders operating online do not verify income.

Usually, the lenders target are the low-income and young people with few assets use it because these people are least able to secure normal, lower-interest-rate forms of credit. The borrowers may not understand that the high interest rates are likely to trap them in a "debt-cycle," in which they have to repeatedly renew the loan and pay associated fees every two weeks until they can finally save enough to pay off the principal and get out of debt. Since payday lending operations charge higher interest-rates than traditional banks and less commonly encourage savings or asset accumulation, they have the effect of depleting the assets of low-income communities.

To save you the trouble of applying for the loan and pay for a big interest, learn not to overspend and buy only what you need and not what you want.

photo credit: cnbceforum.com


24 comments:

  1. I havent seen dis yet in our town.. Do they exist in lhuilliers, etc? Just curious, tnx for d heads up! :-)

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  2. that's really true. That's why it's important to manage household expenses well to avoid such dilemma.

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  3. Payday loans is really helpful but as a finance person. I see payday loans as overpriced in terms of interest. Funny, how when people discuss that they have a low interest and I would recompute the effective interest for them showing that the low interest is not true.

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  4. bull's eye ending! I am learning... not to overspend and just sticking with my budget...

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  5. These small, short-term personal loans can be quite expensive, and often include high fees and interest rates. Payday loans are controversial in many places, and are even illegal in some jurisdictions.

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  6. You are absolutely right Ms. Tess.
    If only we know how to spend our hard earned money wisely,
    we don't have to secure any of that payday loans. It's so easy to
    get it but the problem lies when we can hardly repay that obligation.

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  7. makes you think about when to get a loan. :)

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  8. kudos to you, ma'am tess, for being a wise spender. i think it is very important to live within our means. thank you for sharing with us this information. God bless :-)

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  9. you are right. actually too many people had a hard time saving money because they tend to buy too many things even if they don't need it. because of this they resort to borrowing. self discipline should be practice =)

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  10. This is the most important - To save you the trouble of applying for the loan and pay for a big interest, learn not to overspend and buy only what you need and not what you want.

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  11. I couldn't agree more with you- right on the spot! this is helpful for those thinking about getting a cash advance or loan.

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  12. I think in the Philippines it is widely known as 5-6, correct me if I am wrong. Anyway, been there and done that is all I can say. Don't get me wrong but we did tried borrowing from lenders because of emergency purposes and to be honest instead of giving us hope it did kind of buried us in debt. Luckily we already manage to clear everything and I do agree that we all should be a wise spender and just live within our means.

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  13. Oh loans after loans. Thanks for sharing this information.

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  14. Very informative post. This useful especially to the people who wanted to loan. :D

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  15. Its a good thing to have for those emergency cases but for those who do know how to spend their money wisely, this is not a good practice to fall into.

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  16. Yes, I agree. Live within your means and save as much as you can.

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    Replies
    1. Personally, I am using payday loans. great service, great online access, easy to set up anything ive wanted to use, im hooked! what few fees i have had to pay (eg. i transfer money monthly to my daughter at college) are very reasonable. Just do not overspend the money to avoid being caught in a bad situation. cash advance

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  17. Payday loans can be people's lifeline to meet some unexpected expenses.

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    would really make my blog shine. Please let me know where you got your design.
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    My website > read this blog tumblr

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  19. I'm not a "loan" type of person. Yes, I would borrow 20 pesos from friends from time to time only to pay it back ASAP. I grew up with my mom not loaning from anywhere. She would only buy what we need and pay with cash. She didn't even have a credit card or checking account. It wasn't until I was in college that she availed of one and then started loaning from SSS or Pag-IBIG or their union because times are hard and their salary is almost the same as it was 15 years ago. I think people are in debt because they often buy things they can't afford. At least, that's what I see with my aunts and uncles. They but material things they can't afford and their salary is gone even before it arrives. It's sad, really. :(

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  20. I've known some lenders that allows unemployed individuals to avail payday loans, they even refer it as poor credit loans. But of course the loanable amount is lesser as compared to the ones who are employed.

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  21. Personally, I use payday loans. They have great service, great online access, easy to set up anything ive wanted to use, im hooked! what few fees i have had to pay (eg. i transfer money monthly to my daughter at college) are very reasonable. Just do not overspend to avoid getting in a bad situation. cash advance

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  22. As far as i know there are some payday lenders that allows unemployed individuals to avail loan. I don't know if it is a gimmick or not. :)

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