Payday Loans Provide Relief
By Jack Landry
There is nothing more frustrating than facing a difficult financial situation and not knowing how to get out of it. We try our hardest to prepare for whatever will come our way but sometimes we have expenses that we cannot predict.
When we must deal with these we have many different options we can take and each one has its own costs and benefits. Because of this, it is important to compare all of the options so you can do whichever one will save you the greatest amount of money.
You try to save your money by placing a certain amount of your paycheck in your savings account each month. Despite this, sometimes too many financially draining things happen at once.
Say your car breaks down the same week rent is due and you will not get your paycheck until the following week. In this situation you are only $100 short of paying off both so you need to figure out a way to come up with the money.
Being $100 short you consider just not paying your rent. If you hold out a week then you could pay it in full when your paycheck comes.
The problem with this for your budget is that you will be charged a late fee on your rent. This would add a percentage of how much you pay, and is usually quite a considerable amount.
You then decide that you will just not fix your car and try to get rides to work. The problem with this is if you miss a day of work you will miss that day's pay.
This will have the same effect on your budget that spending that amount of money would have. So again this seems costly.
Another option that you have is to simply write out a check for money that you do not have. This seems attractive because if they do not deposit your check for a little while you could run to the bank when you get your next paycheck and make sure you have enough to pay off the check.
Considering you are paying a car repair shop and your landlord, the reality is they will deposit your check. This can get expensive for you because banks have bounced check fees they apply to checks that have not gone through.
These fees are usually anywhere from $25 to $50. When your check does not clear they will charge you this fee just because you were $100 short.
This is when you should learn about payday loans. These loans last only a short time so you can borrow the money you need and then pay it off quickly to avoid staying in debt for too long.
On a $100 loan the average fee per day is just over one dollar. That means when the loan ends after two weeks you will owe about $115.
This is clearly the lowest fee you will be paying in all of these situations and thus you can save money by using a payday loan. Despite its low fee, other financial institutions have attacked payday lenders for having a high annual percentage rate, or APR.
This number is simply how much they charge you in interest for the year. Payday loans generally have an APR of 250% to 350%.
This number is high because these loans last such a short period of time. If they were to last a year then this would be a ridiculous fee but because they only last a couple weeks it translates to that low fee you discovered.
Taking out a payday loan is a very simple process. You can walk into any payday lender and tell them how much you need to borrow.
They will then discuss with you how much you will be paying in fees come the expiration of your loan so you are not surprised and you fully understand all of the details.
You then show proof of a steady income, like a pay stub, and then write out a check for how much you will be borrowing plus the fee. This check is dated for the day when the loan expires, so on that day the lender can take your check in and the transaction ends.
When you give them this check they hand you your money and you can walk out free to do with it what you want. Because they take the check in when the loan expires, it is very important that you make sure you deposit your next paycheck as soon as you get it.
As long as you act responsibly then you can ultimately save money using payday loans.
About the author
Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and payday loans. He has been a consumer advocate for nearly 25 years.
Contact Info:
Jack R. Landry
JackRLandry@gmail.com
http://www.CheckCity.com from http://www.FreeArticlesAndContent.com
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