Payday Loans... Not as Good as You Think!
"Cash Advance", "Check Advance", and "Post-Dated Check Loans" all characteristically fall under "Payday Loans". Inviting as it might seem to receive a close to seamless chunk of money with no credit or bad credit, we wish to strongly urge you to avoid these open doors to high speed cash in hand.
While the money you receive might be a welcome relief in the short term, the extended risks associated with this sort of loan can be damaging to both your financial situation and quite possibly hinder your ability to borrow money in the future.
The major risk is most obvious; that being the very high interest rate. While you might be quoted an attractive percentage to begin with (dangling the carrot, so to speak), typically there is a catch to receiving this interest rate and there is a very low probability that you will receive the advertised amount.
Although your credit score is not an issue when signing onto a payday loan, it is guaranteed to become one should you default in anyway. One missed or late payment will damage your credit rating and the importance of maintaining a good credit score in the event of future borrowings cannot be emphasized enough.
Consider a typical example of how a payday loan bills you: You wish to borrow $200 from a payday lender. Immediately a 15% fee is applied ($30). The amount you receive then becomes $170. This, which appears to be a manini amount, translates into an APR of 458% if the loan is paid in two weeks (presumably your next paycheck). Should the loan roll into a new payday loan, another $30.00 is added and the loan increases to $230. All said and done, it has cost you $60 to borrow $170 for one month.
Please do not run the risk and be misled into thinking that a payday loan is a cheap and simple way of borrowing money. The struggle to cover a payday loan can be daunting and you could be left with very little to cover your mortgage or rent, your vehicle loan, utility bills and of course everyday living expenses. VICFCU has financial counselors available who can evaluate your situation and hopefully find you some more favorable options. Please feel free to call us and schedule an appointment.