High Interest Loans


	High Interest Loans Payday Loans – Should They Be Avoided?
You probably receive daily spam over email or see ads on the internet frequently regarding “payday” loans, offering short term advances on your paycheck. These high interest loans may seem like a quick solution in a bind, when you have a payment due that you can’t cover today, but could if you had your paycheck just a few days earlier. People have always needed small, short term loans, and loan sharks used to provide the high interest loans necessary to satisfy the needs of the consumer. Today, the same high interest loans are offered by “fast-cash” businesses. Although it may seem like a good solution in a bind, but upon closer examination, we are simply handing our money over. The short-term loan industry has become extremely profitable, and the public is suffering from it.

		To get one of these loans, you must have a checking account and a steady job. You then are required to pay a fee (sometimes $200) to have the amount of a paycheck (perhaps $800) advanced to you until payday, at which time you then pay back the amount advanced plus interest (that means that, to receive $800 a few days early, you are often paying around $300, so that you are only actually seeing $500 of the money yourself – that means you are handing over more than a third of your money for instant gratification). When doing the math, this high interest loan costs much more than the $30 or $40 that you may incur in late fees from the account you needed the money to pay. If you must request a loan, and you have credit poor enough that will insure it is a high interest loan, at least turn to a legitimate source. Many banks offer direct deposit advance for a much smaller fee – all you have to do to qualify is sign up to have your paycheck directly deposited into your account. Don’t let payday lenders take advantage of you. There are always better solutions to the problem.

Articles by Staff Writer Robin Vela, a freelance writer living in Texas

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