By Siddarth Nagaraj on March 11, 2011
.jpg.aspx?width=75&height=75) Those who have had experience with dubious lending services often become instantly wary of payday loans on the basis of how they are often advertised. They are right to do so. Marketed incessantly through multiple forms of media, payday loans are often portrayed as the ideal way for those with bad credit to access capital that will allow them to pay for small, immediate expenses. In fact, the repayment process involved can be highly costly, and those who are allured by the promises of payday loans should reconsider their choice very strongly.
As the name suggests, the loan is typically due on the borrower’s next payday. Payday loans allow for an individual to acquire a sum of money by either personal check or electronic transfer. Upon making the loan, the debtor incurs an additional fee. This fee is based on increments of money borrowed, with increased fees for larger amounts of money given to the borrower by the lender. Alternatively, the fee can be a certain percentage of the check’s value. These fees grow in size not only with increased loans but also with extensions of existing loans, known as “roll-overs”. Consequently, the terms of these fees mean that payday lenders reap enormous profit despite the supposedly borrower-favorable terms of the arrangement. They compound the cost of the loan by increasing in amount every time you are unable to repay the loan in full by the time your next payday rolls around. Each time you roll over your loan, the fee will grow larger, placing you in ever-increasing debt. Weekend payday loans are similar to payday loans in all the aspects mentioned above. They require an active debit card account and will only be given to individuals who have been employed for at least three months and earn a monthly salary of at least $1000. While weekend payday loans are often advertised as providing emergency funds in an especially fast manner, they charge even higher interest rates as well as upfront costs than regular payday loans, making them an unadvisable option. They also provide less money, which may at least provide borrowers with an impetus to use the loan only for emergency funds.
Weekend payday loans are meant to be used by those who need emergency funds, but there are other ways to fulfill those needs. Depending on your situation and perceptions of your reliability, you can get a small loan from your credit union or negotiate with your creditors. You can also contact credit counselors to discuss your options. You are always free to proceed with taking a payday loan, but before you brush off the concern that you may not be able to repay the loan in full when it is due, bear in mind that if your financial status is such that you are looking for a line of credit that will give you immediate short-term cash, there is a possibility that you may not be in a position to repay in one sum when the time to do so comes. |