By Kenneth Long on June 4, 2010
.jpg.aspx?width=75&height=75) Payday loans provide fast cash to tens of thousands of struggling families everyday. They are especially popular in poor neighborhoods long abandoned by traditional lenders.
When you encounter an unexpected expense such as a major repair on your car, it can be tempting to take one of these loans out in order to be able to pay the repair bill. Of course, you know that you probably should have put a little money away each pay period in order to deal with extra expenses.
Still, there are certain situations where you might be so desperate that you are willing to make the financial equivalent of a deal with the devil in order to prevent disaster. Perhaps your electricity or water was cut off. Maybe you had a medical emergency.
You may have a very strong argument for taking out a payday loan. If you are absolutely positive that you need to take out a payday loan, understand that there are alternative payday loan products that might actually beneficial. These are normally provided through credit unions that find new ways to serve their clients without gouging them for their last dollar.
If you instead choose to apply through one of those instant approval payday loan companies, you are committing financial suicide. If you walk into one of those establishments, ask yourself "where will their other customers be in five years?"
Likely answers include prison, bankruptcy court and the social security office. If you follow that same path, you are sentencing yourself to a life of desperation and poverty.
Reconsider why you are trying to receive a payday loan in the first place. Most electric utility companies will allow you to catch up for one month and keep your lights on, as long as you don't go more than 2 months behind. If you are trying to pay a medical bill, you can usually pay them a portion of the bill, the greater of 2% of the balance or $20 each month without incurring any interest or worrying about collections.
Again, if you are still determined to get a payday loan, consider that many credit union payday loan products charge interest rates of 12-15%. Those "instant approval" places average 391% APR. An alternative might be the better choice!
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