Finance & Loans
WHAT YOU NEEDTO KNOW ABOUT PAY DAY LOANS
June 14, 2011 by creative · Leave a Comment
A pay day loan is a short term loan given out mainly to persons with poor or no credit. The lender will keep an uncashed check from the borrower or electronic access to the borrower’s bank account as collateral. The borrower has to pay within the given period (which is generally two weeks) the amount borrowed plus borrowing fees and if he is unable to pay it back on that day he will be charged an additional fee.
It is a very convenient way to get money in an emergency, but the danger lies in the extremely high Annual Percentage Rate (APR) charged on these loans. For example if you borrow $100, at the end of two weeks you will be paying a fee of $20 and in the event you are unable to repay it on time, the fees keep adding up. Not being unable to pay back on time means you are sinking deeper in debt which will have an adverse effect on your credit score.
Find an alternative way to raise the money needed, such as borrowing from a family member or friend on more reasonable terms.