Payday Loan and Car Loan businesses are having no problem booming in this economy. Why? Because more and more households are relying on them to make it week by week to make rent and to keep their utilities on. The biggest problem with these type of places is that they have incredibly high interest rates. They make it very difficult to repay. If you are already making it pay check to pay check, trying to repay a loan of only a couple hundred dollars within two weeks time can next to impossible. So people then turn to another loan company to pay that loan until they have exhausted every resource possible. Typically you can expect to pay $15-30 for every $100 borrowed, barring that you repay on time. If not, then you expect that amount to triple within a few weeks time.
These places use every scarey tactic to collect on a loan also. They basically are a legal loan shark. Unfortunately, because of the nature of the loans, when people default (when you are only given a couple of weeks, its easy to do), the result that people end up having is bankruptcy. When I see these places, I can’t help but to think of the old television show from the 70’s called Good Times theme song. There is a part where even back then they describe these “Easy credit rip off” type of places. There was a time when you would generally only see these establishments in impoverished areas. Now you can find them on every corner.
I myself have not been immune to needing these places from one time or another. Three years ago, before the Payday Loan places were in my area, I needed a couple of hundred dollars to hold me over because of an emergency and borrowed against the title of my car. Thankfully, I knew I was going to be able to pay it back before the loan came due. But that isn’t always the case. Had an emergency crept up unexpectedly, I may have found a tow truck hauling away my freshly paid off vehicle. For what? $200. But they would have had that right had I not paid within the agreed time.
Before taking these kind of loans out, weigh out the pro’s and cons to each type and seriously evaluate your situation. If your in a situation that money will always be tight, you need money, and you have a car worth $5,000 and you only need to borrow $200, it may not make sense to borrow against your car. If anything should happen, you are chancing losing your means of transportation worth a lot more then what you need. If the situation was that bad, you could sell the vehicle for a lot more than the loan. Here is the kicker on that one; even if they repo your car because you defaulted, you still owe the money. So you are out the money and the car. Even the payday loans, they have the right to detach your wages once the amount has skyrocketed to an unreasonable amount. So it may be a long time before you see a paycheck while paying it back. That situation could easily put you right back at square one needing a place like that again. They got you coming and going no matter what. Only borrow on these quick loans if you know beyond a shadow of a doubt that you can pay it back by the term.