As payday loan providers continue to expand across the country, they have started to come up with more and more innovative methods through which they can lure new customers into their places of business to apply for loans. One of the methods that is widely used is promising new customers low fee payday loans that charge a below-average fee or interest rate. Ironically, even these so-called “low fee” loans can end up costing you a whole lot in the long run. Let’s look at some of the reasons why payday loans are just not a good idea for most consumers, even if the fees and interest rates are lower than at some other locations.
The main reason why “low fee” payday loans can end up costing you every bit as much as other high interest personal loans is pretty simple: because they can turn you into a repeat customer if you feel that the lower payment makes it less dangerous for you to take out the loans. Payday loan providers depend on people visiting them on more than one occasion, and they know that even if they charge a low fee, they will probably make up the money in the long run when you return to them for yet another loan (or refer a friend or family member to them). And sure enough, like clockwork, some of those same loan providers who had low fees for you the first time may welcome you with higher interest rates now that their “special introductory” offer has expired.
So be careful the next time you find yourself being tempted by these “low fee” payday loans that are being promised on the corner. No matter how low a fee is, it’s never worth the damage it does to your credit report and future earnings potential. Most people who take out payday loans don’t really need them for a legitimate emergency anyway, so it might be best to ask yourself whether or not you really need the cash right away, after all. Good financial planning means you’ll have plenty more to spend in the future on the things that really matter, like your family!
The payday loan industry is growing by leaps and bounds, and that equates to no lack of eager customers waiting in line to get their paychecks a little bit early. That would be great if they were getting those paychecks free and clear, but the sad fact is that payday loan providers charge a fee for the money they advance. And while some people would say that any fee is too much when you are taking out a loan or cash advance, the lenders themselves often market their products as low fee payday loans. Marketing is one thing, but is there really anything such as a “low fee” when it comes to a decision that could ruin your credit and bank account?
Payday loans are insidious not only because you always lose money when you get an advance on your paycheck; they also can be addicting, and there are plenty examples of individuals who throw away a substantial portion of their salary every year by taking out payday loans. The lenders themselves make it as easy as possible to get as many payday loans as you want, since it’s in their best interests to charge as many fees as possible. But while it’s great for them, it isn’t good for your pocketbook or for your credit report.
If the average payday loan customer actually put into a savings account all of the money that they wasted on loans each month, they might actually build up a rainy day fund that could remedy any financial emergencies they might be faced with. By staying clear of any kind of high risk personal cash advances, you can eventually heal your credit to the point that you’ll qualify for some more legitimate, safer loans with even smaller interest rates and fees. The next time you are tempted, ask yourself: would you rather have another payday loan or get approved for a mortgage on a new house? It’s up to you.
It’s always slightly amusing to see lenders advertising “low fee payday loans,” as though paying less to get an advance on a paycheck that was already coming to you is some sort of a great deal. Even if you only pay a few bucks to get a payday loan, that’s still a few bucks that you wouldn’t have lost if you would have just waited for your doggone paycheck instead of going to a high-interest lender. But it isn’t just the first fee that ends up costing you a bunch when you go and get a payday loan. Instead, the real damage comes when you start getting addicted to paycheck advances and start going back again and again. That’s when you start to see fees add up and your credit score drop.
The reason why low fee payday loans can be so addicting is that when you get into the habit of getting your paycheck earlier than you should every month, you start counting on that money on a certain date to pay for genuine expenses or just recreational expenses. It can be fun to get money early to purchase something fun that you’ve had your eye on, but when you start abusing payday loans, you’ll find that it will start to get more and more difficult to pay for the real necessary things like rent, mortgage, food and clothing. And there’s where the real trap is revealed when it comes to payday loans.
Let’s talk for a minute about the differences between legitimate emergencies the call for payday loans and unnecessary spending. Real cash emergencies involve paying for problems with unforeseen medical bills, lack of money for food or rent, and a very few other exceptions. A legitimate financial emergency does not include new electronics, concert tickets, or even keeping the cable turned on in your house. If it doesn’t involve keeping you and your family safe and alive, that isn’t really an emergency, and taking out low fee payday loans to pay for it is probably not the best decision in the world.
Believe it or not, it’s that very reasoning that allows people to ascertain the difference between necessary and unnecessary spending that spells the difference of wasting money on low fee payday loans and saving money for a better financial future. If you can just tell the difference, you’ll be much less likely to take out a payday loan and adversely affect your bank account and credit score. Having said that, however, there are also some people who do understand these differences but still take out payday loans anyway. To tell the truth, if you’re one of those people, I doubt there is much anyone can really do to help you much.
But if you do want to work hard and build a better future for yourself and your family, then going the route of payday loans is definitely not the choice you want to make. Instead, start planning ahead by putting a bit of money into a separate savings account every month, creating a fixed and realistic budget to follow, and watching your non-essential spending. It’s find if you’ve taken out low fee payday loans in the past, but you need to forget about those kind of high-interest personal advance loans if you really want to turn things around. And hey, there’s no better time to start than today!
