Bad Credit Payday Loans Increase Financial Risk

Something in our financial system that I really have to question is the payday/cash advance loan. Think about it – you never really need to take out a payday loan unless you are in a terrible financial situation, but the loan itself will put you in a way worse situation. Before you take out a bad credit payday loan or cash advance, I would highly recommend thinking it through.

The interest rates on bad credit payday loans (or any type of payday loan for that matter) is going to be more than 1000%. These loans compound so fast it’s ridiculous. If you borrow $1000, you’ll owe $2000 before your kids start school again.

I personally don’t see a lot of difference between payday loans and many other addictive behaviors like gambling and drugs. People get themselves into a terrible, vicious cycle and have no idea how to escape from it. Sometimes they’re able to pay off their payday loan but then have very little left over to shop or buy the things they need. What do they do at that point? They get another payday loan.

If you find yourself in this cycle, you’ll end up with at least 10% less money. Why? Because these loans generally cost $10 for every $100 borrowed – if you pay the loan back within about two weeks. This is extreme interest and if you don’t make your payments on time you’ll end up in a world of hurt. You’ll get charged late fees, convenience fees, and will also be charged interest again and again. These numbers don’t add up well and you can expect to stay in a weak financial position for as long as you’re using this type of loan.

These loans are often called payday loans for bad credit because people in any credit bracket can use them. I think they should be called this because they cause bad credit. They make you live on less money without personal discipline.

I would highly recommend NOT using payday loans with bad credit. If you must, make sure that you shop around well so that you can find the absolute best deal. It still won’t be a great financial decision but at least it will be the best of the worst.