Do Payday Advances really make sense?

[rizzmo]

Originally Posted by Joan.of.the.Arch

Actually I think it required legislation in each state to make these places legal about 20 (25?) years ago. "Usury" laws go back many years in this country. I think usury laws were repealed and new law written that makes the previously impermissable loans permissable. The passage of new legislation meant to accommodate credit card companies by allowing them, in certain states, to charge previously disallowed high levels of interest is probably what started us down the road to make even higher levels of interest legal. Of course, there were always loan sharks, but their business was illegal and prosecutable. Now we've legalized extremely highest interest loans.

They get around Usury laws by charging "Fee's" for borrowing the money. Fee's are mostly unregulated. Credit card companies don't have to obey Usury laws because they don't apply to federal lending instituions.

[BlackDiamond]

Originally Posted by cicy33

why do you consider this being shady? There are many people who use a cash only basis. Granted some are people who have screwed up their check writing abilities. As a matter of fact you even said he took out the loan and paid it right back. So, he pays back what he borrows and quickly. that sounds responsible to me. Perhaps not responsible to take it in the first place but things happen. I have never used a payday loan and hope I never will. But I am one of those people that believe that I am not able to see what others are going through and be aware that unforeseen situations can and do happen. Now, while I will agree that taking the loan for a big game (if that is what it was) was crazy in my opinion there are some people that would be the exact opposite. but then again, the only game I watch is baseball. football is yucky well to me anyways.

lol he was just an all around shady individual. I suspected the lack of paper trail was because he may have been trying to avoid child support. I never did find out but I wound up dumping him after one of his exes put a restraining order on him. Luckily, I fled before there was any serious involvement. haha. I laugh about it now.

And it was a soccer game, not a football game. Not that it matters. But since we're mentioning it.

[nmboone]

Around 15 years ago or so, my parents got so badly caught up in these people's schemes it's ridiculous. I'm not saying it wasn't my parents fault because they're the ones who went and got the loans. But those places are literally the devil. I remember being young and riding around with my parents from loan place to loan place trying to catch up with all of them. They literally took loans from every payday place in town. My parents ended up bankrupt.

Experiences like that are probably why I've wanted to learn about money as an adult so I can avoid things like that.

[maat55]

I've considered opening a payday loan a few weeks before 12/21/2012. I'll take houses as collateral.

[heidrek]

Paypday loans are often misused by people. Getting a payday loan should really be a last resort, but for many people it's s common option. the interest rates on those things are pretty punitive.

[neguy11]

I used payday loans for about 6 months. Yeah the fees are high, but it prevented me from paying bills late. I didn't get caught in the "trap" because I knew I had a yearly bonus coming and used it to pay off the last loan. I think they are fine for occasional use IF you understand what you are doing and don't take out more $$$ then you need.

[maat55]

Originally Posted by neguy11

I used payday loans for about 6 months. Yeah the fees are high, but it prevented me from paying bills late. I didn't get caught in the "trap" because I knew I had a yearly bonus coming and used it to pay off the last loan. I think they are fine for occasional use IF you understand what you are doing and don't take out more $$$ then you need.

I personally look at them as an "I failed to prepare properly for an emergency", wake up call. Payday loans, credit card balances and bumming off family and friends are all symptoms of irresponsible planning. A lot of people do this out of ignorance and training from others.

It is easier and funner to just spend and consume, than save and plan out future expenses. The sad part is when people have learned there are emergencies in life and still just live payday to payday.

[Slandgie]

We got snookered into a payday loan many years ago. Funny thing is, it was when I made more money at a previous job. Since then, I have found ways to cut back on spending and have no need for those snakes....

[wysiwyg4]

There are many other options as you have stated that you can look into.

Charging with credit card is one good option. It gives you at least
3 weeks time to come up with money.

Interest on certain cards and some folks are quite exuberant but not in
the stratosphere like in the case of payday.

Any option you have stated is better than payday.

[Stuartthomas]

obviously ...If you take a short term loan and turn it into a 390% APR then of course it sounds horrible. But its not an annual loan, its a short term loan.Short term is different than long term.

[Eric80]

payday loan should be the last place you go. keep it in your mind, NO free lunch, payday loan takes advantage of you (bad finacial situation), and usually charges very high interest.

If it becomes a part of your life, then you need do something to change.

[Debt Relief]

Originally Posted by snshijuptr

I have 2 friends that worked in a payday advance place and told stories about customers who came in every month so that they could finish the month. I know that many people do not do this, but use it as a one time solution. I have seen in various places on this board where people have posted in favor of payday advances.

My question is when weighed against other options, what options are riskier than payday loans? At around 300% APY, what is a worse thing to do? I understand when you have no other options, but what if you have options?

Some options include:
401k loans
Personal Bank Loans
Personal family/friend loans
Charging on a Credit Card
Paying the bills late

I am curious as to the pros and cons.

3 words... Legalized Loan Sharking! Payday loans generally help those with money problems do one thing... dig their hole even deeper.

[Stuartthomas]

Payday loans are good, but many people still don’t understand how they work or just listen to what they hear from friends and think that is how it is done. If a person hears of a bad experience, they think that all payday loans have the same experience, but often each individual has their own circumstances and what doesn’t work out for one person may be just what another person needs.

[disneysteve]

Originally Posted by Stuartthomas

obviously ...If you take a short term loan and turn it into a 390% APR then of course it sounds horrible. But its not an annual loan, its a short term loan.Short term is different than long term.

No, it isn't different at all. If the APR is 390%, it is 390% whether you borrow for 1 day, 14 days or 365 days. The actual amount of interest paid will increase as the term increases due to compounding, but the interest rate is fixed.

Originally Posted by Stuartthomas

Payday loans are good

When will you stop posting this nonsense. Nobody here is falling for it.

[cicy33]

Originally Posted by disneysteve

No, it isn't different at all. If the APR is 390%, it is 390% whether you borrow for 1 day, 14 days or 365 days. The actual amount of interest paid will increase as the term increases due to compounding, but the interest rate is fixed.


When will you stop posting this nonsense. Nobody here is falling for it.

While I will not say that payday loans are good. They are not the evil everyone makes them out to be. They are there because people use them. Yes, their interest rate is obnoxious, but it is clearly spelled out. I personally used one a few years ago. I was made fully aware of how much I had to pay and by when. I was in a tight spot and really needed a small amount of money for a short time. as others have learned and as I have there are other ways to learn to avoid these things. But the bottom line is that people have to take the responsibility for themselves and accept that THEY are the ones that took the loan. If they don't pay it back, not my judgment call. But you cannot blame the companies solely. They would not exist if there weren't people looking for a quick fix to everything. These loans were actually meant for an emergency situation. another thing to think about. many people that use these have poor credit and have little other options. If anyone of you out there on these boards was going to loan money to someone with poor credit, you would either say NO WAY! or you would also charge high interest rate to be sure you got paid back and to make up for the ones that don't pay. If one runs into a serious situation and need money desperately for a brief time and are aware of the pay back these can be useful. anything can be bad. how it is used is what determines the outcome. I mean one can say that a car loan is evil! afterall, people with poor credit pay approximately 20% - 30% interest and if they get it repossessed then they still have to pay it after it is sold for a ridiculously low amount at an auction. so if one gets a loan and then doesn't pay it back and the interest compounds, well, they must be evil too. No, it's not, it is the customer responsibility to pay.

[ferriwinkle]

Payday loans should be a last resort, and i mean very last. The interest rates are ridiculous. One of my former coworkers used to get title loans (similar to payday loans, but they hold your car's title as collateral). he would pay just the interest every two weeks in order to not have his car repo'd. on a 4150 loan, he paid $25 every two weeks for about 4 months until he could pay it off. So he paid about $200 in interest for 4 months on $150 loan---ridiculous.

[Snodog]

Originally Posted by cicy33

While I will not say that payday loans are good. They are not the evil everyone makes them out to be.

I will agree that if you have to use a payday loan a few times during your life its not a big deal. But when people get into the habit of using them it becomes a cancer to your finances. If you have to use a payday loan it is a sign that you are not managing your money as well as you should be and changes need to be made.

I think payday loans are better than the alternative of going back to loan sharking but they should be more tightly regulated. No one should be allowed to charge 800% interest!

Originally Posted by Stuartthomas

obviously ...If you take a short term loan and turn it into a 390% APR then of course it sounds horrible. But its not an annual loan, its a short term loan.Short term is different than long term.

I agree that I'de sooner have a 10 day loan at 390% than a 10 year loan at 390% but for many of these people it becomes a way of life so it has the same effect as a long-term loan.

Why do you keep bumping up old threads and giving bad advice?

[disneysteve]

Originally Posted by Snodog

Why do you keep bumping up old threads and giving bad advice?

He works for a payday lender. He originally had a link to the company in his sig but it was removed by the webmaster. He continues to pull up every thread that ever mentioned payday loans, however, and point out how wonderful they can be and what a great service they are to help the poor.

[maat55]

Originally Posted by snshijuptr

Oh I would never get one. That is the point of my Emergency Savings. I was just wondering after seeing several places where people proposed them as a solution if they were even appropriate then. I personally feel that there is nothing worse than a payday loan. I was wondering if anyone could propose a situation where there wasn't a better alternative.

Unfortunately, many people look at loans as their only option. Cutting their budget sharply and working an extra job to get ahead quickly is considered an unrealistic option.

Until someone has had that "I've had enough of living broke" moment, they will always avoid the hard but most rewarding option.