Do Payday Advances really make sense?

**disneysteve** · 04-23-2010, 08:10 AM

Someone who takes a payday loan every month has a spending problem and/or an income problem. The solution isn't more loans. The solution is to cut spending to match income or do something to increase income. You can't consistently live beyond your means.

I'd say a payday loan should be an absolute last resort only under dire circumstances.

**bjl584** · 04-23-2010, 08:27 AM

It's probably better to default on your bills for the month and get dinged with the late fees and a hit on your credit score than it is to get caught up with a payday loan. Personally, I would cut back to two meals a day and shut my electricity off before I considered a payday loan.

**wincrasher** · 04-23-2010, 08:27 AM

People who use these loans are in a precarious spot in the first place. The exorbitant interest rates are what pushes them over. Most times, their only way out is to revolve the loan into a new loan. It's very similar to what a heroin dealer will do for you.

These places should be regulated out of existance. It's despicable.

**BlackDiamond** · 04-23-2010, 08:47 AM

I dated a guy years ago who took one payday loan and paid it right back, like 2 weeks later. He had no checking account, no savings account, no credit cards, basically his only transactions were cash/money order and he left no paper trail. It was pretty shady. lol Anyway, I recall the interest being pretty high. Like insane high. Even though he paid back right away. He took it out for something stupid. I think he was worried they were going to turn off his cable before a big game or something.

**wincrasher** · 04-23-2010, 09:13 AM

Well, now that I think about it, if it was for football, then it was, totally, like, worth it.

**ceejay74** · 04-23-2010, 09:35 AM

They should be outlawed or regulated to have a more reasonable cost. They prey on the financially ignorant. Like Refund Anticipation Loans at H&R Block (I worked there for one season). I used to try and talk my clients out of those products, but they were so woefully undereducated about money and living hand-to-mouth with no knowledge or ability for getting themselves out of that cycle. Many poor people have a terrible relationship with money and these kinds of services count on that. I think it harms all of society if the poor and uneducated are bilked by companies like that.

**jpg7n16** · 04-23-2010, 12:02 PM

Weird... just saw another thread comment on this. They're horrible.

Please read the following sites - and then never get one!

Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives

Fact Sheet On Payday Loans

Payday Loans: Dangerous Consumer Rip-Off

**snshijuptr** · 04-23-2010, 06:04 PM

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.

**creditcardfree** · 04-23-2010, 06:09 PM

I'd likely file bankruptcy before I would ever use a payday loan. And I'm hardly ever for bankruptcy.

**cicy33** · 04-24-2010, 08:54 AM

Originally posted by BlackDiamond View Post

I dated a guy years ago who took one payday loan and paid it right back, like 2 weeks later. He had no checking account, no savings account, no credit cards, basically his only transactions were cash/money order and he left no paper trail. It was pretty shady. lol Anyway, I recall the interest being pretty high. Like insane high. Even though he paid back right away. He took it out for something stupid. I think he was worried they were going to turn off his cable before a big game or something.

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.

**jpg7n16** · 04-24-2010, 09:14 AM

Originally posted by snshijuptr View Post

... I was wondering if anyone could propose a situation where there wasn't a better alternative.

Someone has a gun to your head and is forcing you to get them as much money as possible from this place.

Even then, it's close

**cptacek** · 04-24-2010, 10:32 AM

Originally posted by snshijuptr View Post

I was wondering if anyone could propose a situation where there wasn't a better alternative.

I was going to say it is better than being on the receiving end of a mob hit. But you beat me to it, jpg7n16!

**disneysteve** · 04-24-2010, 10:51 AM

I would say if it was truly a matter of life or death, like emergency medical care, then a payday loan might be worth doing if it is your only option. I suspect that the vast majority of times, however, these loans are taken for much more mundane reasons. Remember, these places prey on the poor and uneducated. You'll never see a payday lender set up shop in a comfortable suburb. You find these places in the inner city along with the check cashing sites (often one and the same). These are typically people who don't earn much and aren't very good at managing what they do have.

**GREENBACK** · 04-25-2010, 09:56 PM

OK, perhaps our legislators could focus more on educating the poor and uninformed vs. passing stupid bills that these companies will easily find ways to circumvent. They are no worse than cc companies or Goldman-Sachs for that matter.

Our politicos only care about being re-elected for the most part. I lay the blame squarely on the consumer of these loans but The "help" I've seen offered has come in the form useless bills passed that any lawyer with an online degree could get by. The answer to P.D. loans is that they aren't the answer. Educate the people but stop passing useless legislation that benefits nobody.

Do Payday Advances really make sense?