Life's 411: Payday Loans

Wednesday, April 23, 2008

You've heard the ads on the radio and chances are you've seen the signs driving down the street.
Cash advance, payday loan stores are popping up everywhere while the economy is slowing this business seems to be booming.

"Payday loans are being marketed quite heavily right now. They're being marketed to those with last minute emergencies, but they're also being marketed to those that want spending cash or last minute weekends away,"says Elizabeth Schomburg with Family Credit Management.

For those with a plan to pay it off, Payday loans can be a way to get yourself out of a financial emergency, but for others with true financial difficulties Payday loans can turn into a revolving door of debt with extremely high penalities.

"The average annual percentage rate is going to be between 300 and 400%, however I have seen with my own eyes interest rates at 1,800%."
"It's just a rip off because they get you in there and you can't pay it back because it's like 400%," says consumer Earl Kane.

If you looking for fast money there are alternatives that can cost you much less. "You'd be better off to take a cash advance out of your credit card or talking to your employer about an advance on your pay before seeking out a payday loan."

While that's an alternative, possibly the best advice is to prevent the problem before you get into a financial mess.

"If you feel you may have to resort to a payday loan talk to a credit counselor someone who can sit down, figure out a budget what you can do to pay off your other debts."

Source: http://illinoishomepage.net/