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Debt Counseling Assistance :: Quick Pay Day Loan
Quick Pay Day Loan:
How Bad Can a Quick, High-Interest Pay Day Loan Really Be?
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Payday and quick cash lenders offer a short term, quick pay day loan to their customers. These loans usually range from $100 to about $500 and are given to people to help them make it to their next paycheck.
Many consumer credit groups and banking industry professionals have lambasted this industry – saying the interest rates are predatory, the repayment schemes almost impossible and that the fees charged ensnare good people in a cycle of debt.
In fact, the Center for Responsible Lending, a consumer activism and banking industry critic nonprofit, says the quick pay day loan industry costs Americans close to $4.2 billion every year through exorbitant fees and predatory lending practices.
Why Is it Popular?
So if payday loan schemes are so awful and such a rip off, then why are they so popular? You see a storefront every few blocks in major cities and at least one in most towns.
There are well over 25,000 payday shops throughout the United States. This major industry serves over 15 million Americans each month.
Some people enjoy the convenience of an instant cash advance, others are trapped in a vicious debt cycle where they are short every month and desperately trying to hang on to their payday loan payments.
Another aspect? When you need a short-term solution for a small financial emergency, it's sometimes cheaper and easier to take out a payday loan than deal with a line of credit or other source of funds.
Are the Interest Rates Really that Bad?
The interest rates on a payday advance can be extremely high. For example, a $100, two-week loan may come with a $15 service fee. That amounts to an APR interest rate of 390%.
However, in contrast, the fees charged on a bounced check can be well over 1000% or the late charge penalties on some high-interest credit cards could be as high as 600%.
For some, the high fees charged when you get a quick pay day loan are often lower than the fees charged elsewhere.
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