Reasons Why You Must Avoid Cash Til Payday Loan Programs
Despite the wide array of attractive features that cash til payday loan programs offer, the Federal Trade Commission (FTC) warns consumers against it. Though it is very easy to obtain this loan for almost everybody, there are several risk factors associated with the same. There are plenty of reasons why you must avoid these lending programs. Following is a brief rundown on some of those reasons.
Cash til payday loan programs usually turn out to be very costly for the borrower, mainly because of the extremely high rate of interest that lenders charge. Therefore, if you are considering borrowing a payday cash advance, you are strongly recommended to do a thorough review of the actual cost of the loan. It is very important for you to keep in mind that the new US laws have made it mandatory for all lenders and other financial service providers to explain all the terms and conditions clearly through a written agreement. Therefore, make sure you read the loan contract thoroughly. Do not forget to check the disclosure section. This is the section where things are made clear. For example, in the front page, you may find that the lender is offering you a loan at a very low rate of interest, but in the disclosure box, you may come across an array of other hidden expenses that actually make the loan very costly.
Very Short-Repayment Period
Another major problem with cash til payday loan programs is that they are issued to the borrowers for a very short-period of time. As the term suggests, the due date is usually the next payday that is on its way. It means if you receive your paycheck or get your monthly salary credited into your checking bank account on 4th of every month, it will be the due date. For example, if you borrow a loan on 20th April, 4th May will be the due date for you. If you live with a tight monthly budget and have no room for extra savings or extra income, you may find it difficult to repay the loan even on your payday when you have received your salary; after all, you have other financial obligations as well (such as mortgage, car loan, utility bills, grocery expense, and others), which are probably high on priority. Most borrowers usually fail to make the repayment in time. Many of them opt for an easy solution and borrow another cash advance to pay off the previous dues; and this way, they get themselves trapped into a vicious cycle of debt.
The predatory nature of cash til payday loan programs is also another major reason why you should always look out for better financing alternatives and avoid payday lending at all cost. In fact, this is because of the predatory nature of these programs why many states (such as, Georgia) have completely banned the same.