Credit Loan > Payday Loans > If the Payday Loan Looks Too Good… Read the Fine Print

Payday Loan Pros and Cons

“Don’t spend money you don’t have.” This advice has probably been given to all of us. Early on we’re instructed to budget, to put a certain amount of money away for a rainy day and to do without if doing with means going into debt. This is all very sound advice and if we were all able to follow it, the world might be a very different place.

The reality is that most of us have times where our means do not meet our expenses. One way to get through this is a payday loan or other form of cash advance. These lenders offer their services at every mini-mall as well as all over the Internet. The basic principle is simple. The borrower determines what amount she needs and once the lender has determined that she is over 18 and has been employed for a certain period of time, the lendee will write a post-dated check for the amount of the loan, plus a fee comprised of interest for the period of the loan and handling.

As simple as the process of these quick loans is, there is more to it. Paycheck loans or cash advances require very little in the way of credit checks and nothing but the check for collateral. This means they are very high risk, and have equally high interest rates. If there will not be enough in the borrower’s account to pay off the loan when it comes due, there may be penalties, or more borrowing to cover the first loan, leading to an endless cycle of debt and destroyed credit. These problems with fast cash can generally be avoided if the process is approached carefully. Unfortunately, other pitfalls also exist for the borrower. This is particularly true when getting payday loans over the Internet.

Borrowing over the ‘Net offers many conveniences. It can be done at 3 a.m. on a holiday, and many lenders will offer faxless options for those who don’t have access to faxes for providing proof of age and employment. This ease also allows the scam artist to bilk the unwary. An Internet lender doesn’t need a physical office and may not even be a real lender. This means there is little recourse if they turn out to be fakes. Even genuine lenders may take advantage of the process, either over the Internet or in person, to slip hidden fees, penalties or higher than agreed upon rates into the terms of the loan.

It is the borrower’s responsibility to make sure she has read all of the terms carefully and knows what she’s getting into. Otherwise a short-term loan can turn into a long-term disaster.