By Kari Johnson on June 2, 2011
.jpg.aspx?width=75&height=75) People love the idea of payday loans because they can give you money quickly, no matter what you need it for. A guaranteed payday loan takes it one step further by giving you money regardless of your credit score or any guarantee that you can pay it back. It means you can easily receive the money, but there are other things to consider before taking this kind of loan.
Payday loans are designed to be given for a small amount of time, usually two weeks or thirty days maximum. For such short-term loans, the interest rates are high, sometimes worse (up to 12 times worse) than credit cards.
If you fail to pay the loan back in the amount of time allotted, the extra costs get even higher, with late fees and more interest. In the end, the cost of the payday loan can at least double.
If a guaranteed payday loan is the only kind of loan you can receive with your credit score, then you may have trouble paying this loan back. Depending on how much you borrow, it may cost you your next paycheck or more to pay the loan back on time, and the cost only continues to grow, feeding on your wallet and your credit score, the longer it takes you to pay.
Even if you can afford to pay this loan back in the time allotted, the interest rates are still high. You could end up paying thirty percent in interest. If you need money temporarily that you will be able to pay back in a couple weeks, there are other, more conventional loans that take a little more work to receive but usually cost less, so long as you pay it off quickly.
Payday loans are hazardous under the best of circumstances, so you should be suspicious when they say they want to give you a payday loan no matter what your situation is. While it may be easy to get a guaranteed payday loan, it may not be as easy to pay later. If you really feel like you need one, consider how much you will be able to pay in two weeks (or thirty days, if that’s the kind of payday loan you are getting) before going in to speak to them. Shop around for the best interest rates. And always, before agreeing to anything, read the fine print of the contract they are asking you to sign.
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