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Tag Archive | "Payday loans for people with bad credit"

Are Payday Loans As Bad As People Say?

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Payday loans for people with bad credit are supposedly the worst type of loan that you can get, they are even worse than a home refinance for bad credit if you listen to the payday loan companies. However, before you get a payday loan you will want to find out why some states prohibit the companies from doing business in their state, but you will also want to find out what other people have to say about payday loans.

Many states prohibit payday loans from doing business in their state because they consider payday loan companies to be predatory lenders. The reason for this is that payday loan companies charge interest rates that are often in the triple digits, payday loan companies claim to charge these high interest rates because of the credit risk they are taking when they lend the money. The states that prohibit payday loan companies claim they charge the high interest rates in order to make more money.

The biggest problem that many states have with the payday loan companies is the cycle that people are sucked into once they start borrowing money from payday loan companies. All too often when somebody borrows money from a payday loan company they have to continue borrowing money just so they can pay the loan back. How this works is that in order to pay back the loan when it comes due, people have to use their entire paycheck or a good portion of it because of the interest charges and other fees associated with the loan. Once they do that they have to borrow more money just so they can pay their bills and eat for the rest of the month.

To help prevent this from happening states have prohibited payday loan companies from doing business in their states, but payday loan companies have also changed their repayment terms. Many payday loan companies will now allow you to make monthly payments on the loan, which helps reduce the number of people who get stuck in that borrowing cycle.