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The Truth on the Payday
Loan
by: Jay Moncliff
For a while many Americans were relying on a payday loan to
help them pay the bills and get through until payday. However, many of these
services have become illegal because of the high interest rates and fees
associated with them. Of course, online and in some states you can still apply
for a payday loan. Here are some truths of the payday loan you might not be
aware of.
Payday Loan Truth #1 The fees associated with the payday loan
are astronomical compared to other types of credit. It might not seem like a lot
of money if you are asked to pay a $15 fee for borrowing $100, which is an
average fee among the payday loan services. However, after two weeks if you need
to extend your loan it will cost you another $15, so now you are being charged
$30 to borrow $100. If you can’t get the money together quickly you will find
yourself paying more for the credit than you received in the loan.
Payday Loan Truth #2 Payday loan companies are required by law
to disclose any fees associated with your payday loan, including finance charges
and the APR. You must receive this information in writing from the payday loan
center where you are borrowing money.
Payday Loan Truth #3 You are getting in worse debt, rather
than out of debt, when you use payday loan services. The finance fees and APR
are ridiculously high and you will be spending even more money you do not have
to borrow a small amount of money to pay a bill. The better option is to talk to
your bill collectors and find out if there is any way to extend a payment, or
what the late fee might be. Frequently you will find your creditors can help
you.
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