Beware of Payday Lenders

We all need money from time to time, and sometimes the amount we need requires a loan. Some need to pay off student debt, while others may be caught in an unexpected financial struggle. The list goes on and on, but it’s important to know the cons of payday lenders before jumping into one of their loans.

 

Payday loans are typically short-term loans with incredibly high interest rates. They usually do not lend more than $500 at a time, but the interest rates could have you paying triple that to pay it off.

 

Payday loans can carry interest rates higher than 300%! That means a $500 loan could cost you $1,500 to pay off. If you don’t have $500, where will you get $1,500? Standard loan interest rates from financial institutions cannot go any higher than 36%, which is still really high. Kelly Community loan rates aren’t even half as much. Payday loans are risky, because their high interest rates make it extremely difficult to pay off debt.

 

These loans typically are promoted to people who need money fast but can’t always get it from a bank, because they have bad credit, no credit, or low income. Payday lenders do not run credit, which makes the loans easy to access, but hard to pay off.

 

These loans are characterized by the word “payday,” which signifies that the borrowers plan to pay off the loan when they receive their next paycheck. But, when payday comes around, borrowers often get the chance to renew this loan. Loan renewals put borrowers at risk of getting stuck in a long-term cycle of debt, stemming from one quick loan they needed when times got rough.

 

Before committing to a payday loan, ask Kelly Community if they can help. Their team won’t just help you with a loan. They will give you valuable financial advice, as well, at no extra cost. And if you’re already stuck in a payday loan, ask our friends at Kelly Community if they can help you find a way out of it. Even if they can’t give you a loan right now, they will help guide you through your debt challenges.