When you are in quick need of cash then you would find payday loans to be the perfect choice for you when you consider them. It only takes minutes and you get approved to receive small loan and all it takes is a direct deposit to transfer your money to your provided checking account inside 24 hours. Apparently, there may not be any other easier way of getting your desired amount of money. However, consumers should beware as payday loans come with some serious drawbacks financially. Here is why one should avoid these.
Not a wise financial decision in long run
You may find these loans helpful when you are in dire need of money, but they aren’t really a wise financial decision when you see the big picture. With hidden fees, astronomical interest rates and aggressive practices for collection, they are clearly not the best choice for you. When you get these loans in a tight situation then you’re actually making your financial situation even worse.
High interest rates
Payday loans are often associated with exorbitant interest rates. You may find instances where annual rate of interest reaches 300%. Yes, that’s true! The amount may not be considered too big because normally you’re dealing with a short period, a couple of weeks perhaps. The pinch will be felt by you as you start to extend your loan.
Most of the payday loans available today have considerable hidden fees. These fees have to be paid besides the interest rates and loan capital. This certainly makes these loans a lot expensive option to borrow money. It is, however, advisable that before you borrow money through such a loan, make sure to read its fine print so that you can understand all the financial obligations beforehand.
Your credit rating gets hurt
Though it may not be admitted by any payday lender, there is evidence that shows that certain mortgage lenders aren’t ready to lend money to the borrowers of payday loans, regardless of whether they had paid the loan on time.
Why go for payday loans when there are other less risky, cheaper alternatives available?
Before you set out to get the money you need through payday loans, it is advisable for you to sit back and consider every available option. You can contact your credit union, spend less, sell any unwanted possessions or even get some monetary help from your friends and family. So, think well before you finalize your decision.