I can see how it's easy to get into trouble with a payday loan.I've never gotten in trouble with payday loans, but I can certainly see how so many people do. When alot of people get their first payday loan they're amazed that they can go out and get all this really cool stuff without having to actually pay for it. And what's better than free stuff? They go out and buy expensive gifts for themselves, their girlfriend or boyfriend, go out to bars and fancy restraunts and charge everything to their payday loans. They'll get the first couple of bills and perhaps be amazed by the total they've racked up, but the beauty of a payday loan is that they don't actually have to pay it all off at once! They can simply make the minimum payment and continue to live a life of ease and luxury. Eventually though, reality sets in. Any missing a payments will add late fees making the amount you owe even greater. Missing payments and having a huge payday loan bill is not only bad in the short-term (because, come on, who can afford to pay off a thousand dollar payday loan bill every month?) but missed payments and a large amount of debt is bad in the lon-run too. If you ever try to get a loan to buy a new car or to purchase a home, the lenders will first look at your credit rating. If you have a high debt to income ratio (as you would if you've racked up a big payday loan bill and can't afford to pay it off) and if you've missed some payments, you're going to have a bad credit rating and lenders will be less likely to give you a loan. In the past couple of years some people have been getting loans even with bad credit, but the whole economy is feeling the effects right now. Lenders have been giving money to people with less than perfect credit scores at rates which were below the prime lending rate. So basically these people were getting the money they needed for cheap. The only catch was that after a few years the rates on these once sub-prime loans would skyrocket and people would default on their loans. These are all very good reasons to manage your money wisely--payday loans and sub-prime loans aren't magic tickets to prosperity and you need to remember you do have to repay the money you spend. |