Payday loans are short term loans that you pay back in full on your next pay day. To get one, you go into a payday loan store, provide proof of employment, and write a check to the payday loan store for the amount you wish to borrow plus fees. On your next pay day, the payday lender cashes your check.
There are reasons why payday loans get a bad rep. The fees are extremely high: typically fifteen dollars for every one hundred dollars you borrow. And if you can’t afford to pay it back in full on time, those fees add up quickly. Before you know it, you could owe twice as much as you originally borrowed. It’s a very slippery slope.
You have plenty of options when you’re tight on cash: selling stuff on Craigslist, asking a family member for help, or requesting an extension on a bill. I’ve always avoided payday loans like the plague, and I suggest you do the same.
Have you ever taken out a payday loan? What was your experience like? Let me know in the comments.