Pay Day Loans an article that I wrote back in 2010

http://voices.yahoo.com/pay-day-loans-5520535.html?cat=17



Pay Day Loans




Should pay day loans be legal?


Should pay day loans be illegal? In my opinion yes these types of loans should be illegal, because these are predatory type loans. They prey on those least able to afford these types of thing.



Generally those looking for a pay day loan are those who are on the lower income brackets to start with, or who have over extended themselves in other areas.



Pay day loans encourage living beyond your income. More so even than credit cards, because you are putting your paycheck on the line each and every time you go get one of these loans. It can lead to a never ending cycle and cause you many problems, especially if you are already living paycheck to paycheck.



I have experience with payday loans due to the fact my husband has used these services several years ago. This was a horrible experience for us. Due to the fact we were at that time living paycheck to paycheck, every penny of every paycheck already accounted for.



We ended up using all of our taxes that year to catch up on all the fees and to pay off this loan. Because every week we did not have the money to pay it back so we would have to take out another loan. This added to the charges. It was a nightmare.



Pay day loans sound good until you remember that this is a short term fix for a long term pattern of financial difficulties. If you take out one of these loans without thought of how you will make the following weeks bills, and with no savings in the bank this is a recipe for a lot of problems.



Pay day loans are good for the ones in this business because they know those taking these out already cannot get loans from other sources, such as friends, family or a bank. The reason someone may not be able to get money from these resources is because of the fact being they either have limited work history or credit history or have a long term history of bad credit. In other words they are a poor risk.



The pay day loan people though they take the paycheck that someone is expecting, so they do not get that paycheck. Which leads to a week or more of no income for the person who went for a pay day loan to start with, when this same person also has no savings or other means of income, it is almost guaranteed that they will need to return in order to get another loan. This can go on for a fairly long period of time, especially if the individual is already living paycheck to paycheck.



Living paycheck to paycheck is more common than you may realize, many people have one paycheck between themselves and the street.



This is for a variety of reasons, everything from housing costs, to general cost of living. For us, it took one paycheck for the rent, one for the power, water and phone, another for medical needs (monthly prescriptions) and then whatever was left over went to gas, groceries, car insurance, etc. We had very little waste, but we also had no money coming in that could be invested or saved. An extra high power bill is why we ended up going for a payday loan. It was not a good idea, it would have been better for us to have asked someone for a loan instead. But we didn't, so we paid the price over and over again.



It is my firm opinion these are nothing more than predatory loans.