Considering a cash advance or payday loan? You are not alone, these have become extremely popular over the last few years. The reason is simple, people need money and people often need money fast. Those same people who need money fast are unlikely to have access to cheaper lines of credit or low interest loans. This has left an opening that payday lenders will gladly fill. So is it all bad or are there positives to this type of loan? Find out below or get a quote on one right now.
Dallas Cash Advance Pros
Lets start with the glass half full and look at the positive aspects to these loans.
- They fill a void that other lenders do not fill.
While the fees associated with these loans is high, they allow people who could otherwise not borrow money, get it. If you have bad credit, there is no other choice and without payday loans, you simply could not get the money that you need. It is easy to say that payday loans should be made illegal but then who will lend people with poor credit money? I have yet to see any big banks offer poor credit loans for reasonable fees.
- They fund quickly.
When an emergency happens, you often need money fast. These loans almost always fund the next business day. This can make all of he difference for someone who has just had their electricity turned off or who needs an emergency tooth extraction.
- They have few qualifications.
Typically all that is needed is a job and a checking account. This makes them available to virtually everyone.
- You have to pay them back quickly.
This could be considered a negative but if you have to pay it back soon, you can get this debt over with and out of the way quickly.
Dallas Cash Advance Cons
The cons are many so lets get started.
- They are for limited amounts.
You can only borrow so much with a payday loan. Most loans are well under $1000.
- It is borderline usury.
Since the loans are repaid with fees instead of interest, the effective APR is high often in the hundreds or even 1000% range. A $20 charge on $100 is only 20% if it is carried out over a whole year but for a two week loan, the effective interest amount is staggering.
- They target poor people.
Let’s face it, Trump is not going to take out a payday loan. These loans target and sometimes take advantage of poor people. There is no way to deny this.
- There are many unscrupulous lenders.
This industry is full of companies that are seeking to get every cent that they can. They are all too willing to allow their customers to borrow too much, take out too many loans and refinance them again and again. The goal is to trap them in an endless cycle of loans and fees.
So what is the verdict? Should this industry be shut down or does it serve a useful purpose? My opinion is that it serves a useful purpose but it needs regulations. Without the high fees, no lender would be willing to risk issuing a payday loan. So the fees are unfortunately a necessary evil. Still, every lender should offer their customers credit counseling to help them pay off their loans. Refinancing a loan should also be harder with paying off a portion of the principal being required. And why not offer your customers a free two week extension?
Payday Loan Alternatives in Dallas
We are always very up front with the fact that payday loans are expensive. They are perhaps the most expensive type of loan that you can get. These loans are high risk for lenders and they charge according. They do serve a purpose though and can get people that would otherwise not qualify for a loan what they need, money. Still, you should sit down and consider the alternatives to a loan before you take the plunge. Here are some alternatives to consider.
- A Loan From A Bank
If you have the credit, consider a loan from your local bank. The benefit to this would be that you can borrow the money longer and the interest and fees would be far less.
- Money In Savings
No use letting it sit there only to take out a high interest loan.
- Credit Extensions
Call your lenders and see if you can get an extension on your debt. Many will often do so to keep you current.
- Family & Friends
Nobody likes to borrow money from family or friends but it could save you big. Just be sure to be respectful and pay the loan back as soon as possible.
- Open A Credit Card
Credit card rates can be high but are less than payday loan fees.
- Have A Garage Sale
An impromptu garage sale can often raise a few hundred dollars. A side benefit is that you often get rid of junk that you do not need.
- Employer Advance
This can be just as embarrassing as borrowing from friends, but many employers will advance you money on your next paycheck. It is free and could be a great option.
- Military Loans
Are you in the military? You might have special programs available to you.
- Turn in Small Change
Many banks have coin counters that allow you to turn in all of your small change for paper money. You could easily have 20 or 40 dollars hiding around the house.
Getting Out Of Payday Loan Debt
It can happen, you can get stuck in a payday loan. We are the first people who will tell you to be careful with these types of loans. They are high interest loans with short pay back periods. If you are not careful, you can get caught in a vicious payday loan cycle. Here are a few ways that you can get out of your payday trap if you find yourself in one. Also check out this article that will give you some further advice.
- Cut back on non essential expenses.
Until you have paid off your loan, avoid going out to dinner, the movies or buying any iTunes downloads. Concentrate on paying down the loan.
- Pay off what you can.
If you find that you can not pay off the loan on time, at least pay off a portion of the loan. This will make it easier to pay off the loan completely on the next due date.
- Ask for an alternative payment plan.
Some lenders might be able to put you on an alternate payment plan, especially if you have already been through a few payday loan cycles.
- Make sure the loan is legal.
Check to make sure that the lender has the right to operate in your state.
Payday loans serve a purpose but they can get you in trouble. Take action to get yourself out of the loan trap if it happens to you. There are answers.