Payday loans? Do they help or hurt
I have heard alot of mumbling about this subject lately. The professionals tell you stay away from these loan, they will get you in serious trouble.
Well let me give you some insight on the subject. I have been involved with payday loans for a few years now. I currently manage an office in Poplarville, MS. Many of these offices are unethical, and they are the ones that you need to stay away from. Unfortunately, you cant just walk into a payday office and ask them if they are ethical so I am going to help out here and help you make a good decision as to whether or not a payday loan is a good idea for you.
A payday loan is an advance to you until your payday. Basically the way it works is that you will write out a check for the amount of the loan + the fee associated with that amount. You will walk out of the office with cash in your hand. On your payday you will bring in the cash amount of the check previously written and held. You will receive your check back and you can either walk out and say I’m good or you can write out another check to be held until the next payday.
FEES: Fees charged on a held check runs approximately $21.00 per hundred. This amount differs from state to state but it is pretty close.
TERM LIMIT: most payday loans are held from 14-30 days. But in Mississippi, 30 days is the cut off, on day 31 your check will be despoited into the bank
The above is just a sketch as to how it works, so should you or shouldnt you? Well lets suppose you decide to get a payday loan because you have to get a tire on your car and it will not wait until payday. You go through the process and decide that you will need about 200.00, that will cover your tire and ensure that you have gas for work until your payday.
On your payday you bring into the office a payment of 243.00 and you get your check back but it leaves you short again. most people will turn around and borrow another 200.00 to get them again to the next payday. THIS IS LESSON 1 : Dont ever do this. If you find your self falling short and you still need help then by all means, renew you loan but try to bring it down at least $10.00. Beware of companies that require that you go in $25 or 50 dollar increments. Most companies use programs that configure all the numbers so going down an odd number is no problem. If the office that you just paid tells you that it has to be in certain increments, then tell them thank you and go to another company and get a new loan with them. Now instead of paying back 243.00 you will pay approximately 213.00. So each time you have to renew your loan then go down about $10 unless you think you can go down more. You continue to do this until you drop down to $50.00 then you can just pay it out. LESSON 2: If the payday loan office that you are with does not loan under $100 then again pay them out and find someone who does. The reason for this is because $100 is alot when you are struggling and it is high enough to have you trapped by payday loans. Many offices loan down to $50-25. And that will be easier to pay out and wont hurt as much financially. Many payday loan companies will not tell you that you can renew you loan to a smaller principle.
This is basically it in a nutshell. If You handle your payday loans like this you will not get into any trouble neither will you be trapped by. Ultimately it would be better to take out your loan and tell them to deposit the check. then you can get another one if you need it by the end of pay period
LESSON 3: Never take out more that 1 payday loan. if you dont like the company and want to go to another one then pay them out, and go to the one you want and get your new loan.
Some offices will tell yo to go down the street to get a new loan so that you can pay off your loan with them. If you have this happen, pay them out and RUN. they do not care about you going into a bigger hole.