Personal Finance

Payday Loans

Payday loan companies, paycheck loan companies (one borrows the money one EXPECTS to receive in the next paycheck), title loan companies, check cashing companies, all these are types of cash advance services that have sprung up across the country like weeds in a neglected garden. The premise seems good—just write a check, get the money, the company will hold the check, and then pay the check, plus a "small" handling fee when payday rolls around again. Quick loans, fast cash, right? Not necessarily; there are some factors that need to be considered.

To begin with, if one is in a situation where one is having to utilize these services, how then can one know that he or she will have the funds on payday to pay the loan back? For it is indeed a loan, complete with interest and finance charges. What if one's paycheck is delayed (as has happened in some instances)? What if, worst case scenario, one is fired and the company holds the last paycheck until all debts and other matters have been settled?

What if there is another emergency (for that is the ONLY reason a payday or cash advance loan should even be considered), and the money that was to go to that loan has to be used for the other emergency? These are questions that must be realistically faced and honestly answered.

Those who are already plagued with bad credit may see these types of cash advance services as the only way to get money, and therefore may not take the time to seriously all the ramifications of such a transaction. This may only make an already tenuous situation worse.

Unfortunately, some (but, in all fairness, not all) of these places take advantage of those people who, for one reason or another, do not have an account at an established financial institution such as a bank or a credit union. Many of these are people with limited knowledge of the language and the way the American banking system works.

Unless someone is there to assist such persons, the temptation to treat them differently or unfairly may be too much for some cash advance service proprietors to resist. This is not only morally reprehensible, but legal problems may also arise should this be discovered.

Payday loans , or whatever one wishes to call them, should be used ONLY as a last resort, and AT NO TIME should they be used on a regular basis. One should remember, no matter what it is called, it is still technically a loan, with all that is implied.