Payday Loans Can Seem Like a Rip-off

When I think of subprime lending, I instantly think of Payday loans. Obviously they're not the only culprit of charging high interest rates to unsuspecting individuals. There are so many traps out there that snag a lot of helpless people. Anything from personal loans, credit cards, subprime mortgages, etc. The list goes on and on, and there are way too many people in the debt trap that keeps spiraling down. I've been fortunate enough to stay out the cycle, but I know way too many people who have missed their credit card payment, or have opted to pay the minimum balance just to get by. What a lot of people don't realize is how much it really costs to pay off that balance. A lot of people are unsuspecting of how much the interest really piles up when you only make the minimum payments.

Moving away from credit cards, the issue of payday loans has come into play in the recent past. Personally, I'm not a fan of them, and I do feel that they take advantage of an average Joe, but to a certain extent they are a necessary product. They wouldn't be popping up all over the place and making millions of dollars if the service wasn't needed. There are far too many times when someone needs that extra couple hundred bucks to pay for their furnace to get repaired, or to have their car worked on in an emergency to not provide a service such as this. However, the problem that I see with the Payday and subprime world is that few companies take the responsible approach to educate their customers on the financial process. What a lot of people don't realize is how much interest can amount on a Payday loan if you don't pay it off within the two week timeframe that you're allowed. When you sit down and calculate a payday loan, the APR is astronomical, and it's a number that most people wouldn't think is legal to charge.

The service is clearly necessary to a certain extent. People use them every day, however, in my personal opinion, they should only be used as a last resort, and no one should ever roll one over. The last thing you want to do is dig your debt hole deeper and deeper.
Matt W.