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Monday, March 2, 2009

The Truth About Payday Loans

By Gerald Fox

We've all had it. Some unexpected expense comes up, like a broken washer or a broken car, and you have no idea where to get the money to fix the problem. You can choose to put it on your credit card, if it's not maxed out already. This would mean you pay it off over time, with added interest. You can also consider a payday loan.

A payday loan is a small loan, typically in the $ 100 to $ 500 range. It has high interest, especially when you fail to pay it off on time. As with any loan, the payback loan has it's pluses and minuses. But if you're looking for options to get some quick cash, the benefits may outweigh the disadvantages.

If you need some quick cash, a payday loan is one way of getting it. For many people, it beats the alternative of having to loan money from friends or relatives. With the added advantage that you don't have to put your friends and relatives in a tight spot when you ask them for money.

If you have bad credit, or you're a little worried about your credit score, the payday loan offers another advantage. You don't have to go through the usual credit check. This speeds up the process immensely, making it possible to have the money within a day.

If you have short term cash problems, and you're sure you can pay the payday loan back in time, this is a good alternative for you. But if you're not sure about your next paycheck, don't apply for a payday loan. Because you will be looking at some huge interest costs if you don't pay back in time.

Payday loans can be extended, also knows as a 'roll-over'. If you roll over a couple times, you will be looking at interest rates high in the double digits. Pretty steep interest. That's why you always pay close attention to the payback date and make sure, upfront, you can pay it back within time.

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