By: Brandon Ward
In life, everybody has emergencies or “little bumps in the road”. The car breaks down or the AC unit goes out, both are essential to everyday living and need to be replaced immediately, but you don’t have the money until payday. What do you do? Go get a payday loan! Payday loans (cash advances some call it) are a great way to get money quick and fast! You always hear on the radio or TV, commercials for “fast cash”. Sure its fast, and it solves the immediate problem, but what the TV commercials don’t want you to know is what happens “The Next Day”.
Payday loans are like the college campus party of the year. You know if you go to the party all the coolest kids on campus will be there so you want to go. You decide to go; and the president of the best frat on campus offers you a drink. You want to fit in and you agree to drink. Before you know it you’ve had one too many drinks and you are wasted, but hey! It doesn’t matter! you’ve found your quick fix to being a “cool kid”. This is very similar to the loan you just took out at the cash advance place in the mall. Something you know was wrong and you know you shouldn’t of done but you found your “quick fix”! You don’t care about what’s going to happen tomorrow, because all that matters is you got your money and you paid what had to be paid. Sort of like how you don’t really care about that test or exam in the morning because you are taking shots with the frat president. Unfortunately though, just like everything in life, with choices come consequences.
The worst part of every party is “The Next Day”. You passed out at 4 a.m. and you woke up at noon. You have a major headache and just don’t feel good at all, but then you remember you missed your morning class which also means you missed the exam that’s worth half your grade! You also remember you slept through your study group meeting about the project that’s due tomorrow! When you finally come to your sense’s you realized all the things you missed and the problem keeps getting bigger and BIGGER, all because of your “quick fix” to be cool! This is really similar to the interest rates that these payday loan companies offer. Lets say you take out one hundred dollars in a two week loan. You were charged a fee of fifteen dollars. (an average fee for most cash advance institutes) So when payday actually comes you end up paying back one hundred and fifteen dollars. You lose fifteen dollars. Not a big deal right? Wrong! In those 14 days of your loan you are charged one dollar and seven cents a day. (which equals fifteen dollars at the end of a fourteen day period) That still doesn’t seem like a lot right? Wrong again! Now lets say you can’t pay pack that loan for a whole year. Your are now charged one dollar and seven cents for three hundred and sixty-five days! That little one hundred dollar loan suddenly turned into a big old three hundred and ninety-one dollar loan! This would make your Annual Percentage Rate three hundred and ninety-one percent!!! All this trouble and lost money because you found the “quick fix” to your financial issues. No matter what you try the problem keeps getting bigger and BIGGER!
Payday loans were made for exactly what they are, FAST CASH! They can be a great tool, IF they are handled correctly. In most cases though, people don’t properly understand or don’t care about what happens “The Next Day”. They don’t care about searching for other options or finding another way to get there financial problem fixed. Most people are too lazy and uneducated so they go for the “quick fix”. That is what makes payday loans a bad financial investment.