Why Online Payday Loans are Bad

Payday Loans are sometimes referred to as payday advance or cash advance. It may mean cash or payment provided through an applied form of credit such as a credit card. However, Payday Loans basically mean a small, short-termed unsecured loan provided by lenders. Payroll and Employment records are often necessary to obtain an application for this type of loans but with modern technology, there are options for online application and some even offer loans for poor/bad credit.

Don’t get too excited about applying for loan just yet! We haven’t discussed about the Annual Percentage Rate more commonly known as the APR. You don’t expect lenders to lend you money without them benefiting from it, do you? Though we know that there are laws regarding loans, legislation may vary between countries and states. Some jurisdiction outlaw payday loans and some have few restrictions.

Covering the basics of loans, let’s discuss why payday loans are bad.

You won’t be able to practice responsibility on your expenses.

Knowing that you can acquire cash you haven’t earned yet and spend it on things that might not be so important is easy. Okay, so maybe you borrowed money not to buy things but to make ends meet, or you have unpaid bills, delayed house payments and other emergency expenses you need taken care of. But realize that you would not be having these problems if you practiced saving in the first place. “Live by what you earn” would be good but living below what you earn would be preferable. What do I mean by this? Take what you earn each payday. Why not save at least 10% of your income and take 90% for your expenses. If you exceed that 90%, you will have to discard unnecessary expenditures, like dining out on a fancy restaurant every pay day or going out with your friends.

You’ll be dependent on cash advances.

Once you have started using loans as a back-up to make ends meet, then you’ll be relying on this types of means. Saving would be out of your to-do-list because you will be busy thinking about how to make ends meet every time you get your pay. Why do I say this? Logically, once you get your pay, you have to pay for your loan so you could apply for another one once you ran out of money again (in this case, a very big possibility).

You pay for the ability to spend money you haven’t earned yet.

As I have said earlier, loans have interest rates. Instead of paying for what you have borrowed, you don’t know how much you would have to pay just by borrowing it. Some lenders surprise borrowers just by the interest rates. There are countries that lend money for 20% interest rates plus added service charges such as insurance. If you have started saving the day you earned your first paycheck, you would not need this kind of services in cases you need that instant cash. If you want to buy something, it will have to wait until you have saved enough to buy it.

Just a piece of advice: Spend responsibly and live within your means to keep you free of debts. You surely don’t want to be buried in debts. Right?