You see the offers everywhere. They are instant payday loans, which can give you from as little as $1000 to over $1500 overnight with no credit checks, and you can get it for a small fee. They guarantee instant loan approval within minutes, and you can do it entirely online. For someone who is short of cash, has an unexpected expense, or is simply looking for some extra money until his or her next payday, which seems to be too far away, this sounds like a very good deal. The truth is that anything that sounds too good to be true usually is and there are always strings attached. No one gives you something for nothing in the financial world.
The requirements for these types of short-term money lending operations are very loose. It is almost too easy to qualify for this type of loan. For most of these kinds of payday cash loans, you must only be at least 18 years of age, have a checking account that has been in operation for at least 90 days, and make at least $1000 a month from your current job or receive $800 a month in social security benefits.
If this sounds like something you should be suspicious of, you are correct in thinking that. While they say they only charge you a small fee for this fantastic short -term loan service, in actuality, it is an astronomical annual percentage rate (APR). The fees vary from site to site and depend on how long you need the loan for. For more than two weeks, the price is more significant. For less than a week, they price is smaller, but it can still get you into trouble.
If for some reason you can't pay back the loan on the specified day, all sorts of charges can occur. Since some services use a post-dated check, you can have bounced check fee from both them and your bank. If it is done electronically, you don't usually have fees from your bank, but they charge you for every extension that you request beyond the original pay date. They can charge you an extension fee, another fee for the amount you borrowed, and they can continue to double the amount of the fees for every extension after the third one. This can add up very quickly! You could find yourself in over your head in no time with the various fees while still owing the principal amount.
So, while an instant payday loan may sound like a good option if you are short of cash, it is smarter to simply live within your budget and consider alternate options if an emergency arises. These companies make an advance on your payday appear to be a simple thing, when in reality, it can turn into a big mess.
Bob Hett offers great tips and advice regarding all aspects concerning Loans.
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