Payday Loans

Is Cash Advance Payday Loan A Good Debt Or A Bad Debt?

Though cash advance payday loan programs have been very popular for several years now, you must be wondering why some consumers are still reluctant to borrow these loans and why some people are so much against payday lending. If you do not know yet, let me add some fuel to the fire – recently even the Federal Trade Commission has warned consumers that they should avoid payday loans. Considering all these facts, we have a strong reason to say that these loans are not good debt. Following is a brief overview on it.

The Most Expensive Option And Very Risky Too

For a $100 of cash advance payday loan that is issued to a borrower for a 14-day repayment period, lenders charge over $30 as interest; other finance charges are additional. It means if you are borrowing $500 and the due date is after twenty days, you must expect to repay somewhere close to $750 or even more. What is worse, if you fail to meet the due date, you will be bombarded with various penalty charges, such as multiple times NSF fees (both from lenders as well as banks). It is quite unfortunate that payday loan lenders who claim to offer easy loan programs are often quite unfair with their debt collection practices. For example, it is a very common practice that they send the same check for collections again and again. Every time the check bounces, they charge your account with a hefty amount of NSF fees. Besides that, you are also charged interest at the same high rate for every single day of delay you make in debt repayment. So, if you are late by a month, you are very much likely to be liable to pay back more than double of what you had initially borrowed.

What If You Need Instant Cash And Have No Better Alternatives?

Since you are looking out for a solution to your immediate financial crisis, it does not make sense to invite troubles. But, if there are no better alternatives available to you and cash advance payday loan seems to be the only option, you are advised to do the basic homework before you sign up for it. Considering the kind of urgency you are in, you probably tempted to borrow a loan at an extremely high rate of interest, but it is still very important for you to make sure you can afford to make the repayment in a timely manner. If you very well know that timely repayment is not possible and you still borrow a payday cash advance, this is like willingly inviting a more serious trouble. In this case, you may get instant relief, but on the next payday when you fail to repay the loan, you will find yourself into a deeper quagmire of financial troubles.

Therefore, you need to be very careful while you are dealing with cash advance payday loan programs.


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