Payday loans have been the go-to financial help that anyone could ever ask for. The ease of getting a Payday loan approved within a day is what makes it so popular. Most of the people who opt for a payday loan do have the money but not necessarily at the moment. Such people usually depend on their monthly salaries for most of their expenditures.
Payday loans like any other loan have a certain interest amount that has to be paid along with the loan amount. People tend to fall into huge debts due to high-interest rates which they do not account for while taking the loan. Moreover, if they are unable to pay back the loan within the specified time period, they are punished heavily for it.
There are multiple websites like PayDayMe that provide payday loans online on the same day. Before you take a payday loan, ask yourself – can payday loans make you fall into a debt trap?
Payday loans generally have a higher rate of interest. Thus, these loans are ideally taken in an emergency like situation, when you have a need for instant cash.
It could be for any medical emergency, fixing your house, repairing your car. However, you need to make sure that you can pay back the loan amount within the fixed period of time to avoid any penalties.
Some individuals take loans to buy luxury items, knowing fully well that they would pay off the loan when they receive their salary. Such people are not likely to fall into debt traps as they do have the money, but just not at the moment.
Others take these loans out of emergencies and financial crisis. These people are more prone to fall into debt traps. Most financial crises come up unexpectedly, leading to impulse decisions of taking loans to clear the bills. Such people won’t have a plan or the means to pay back the loan, causing them more harm.
If you’re financially unstable or have a low income, then payday loans are not for you. These loans have to be paid back on time and with the whole amount, else it could lead to legal actions.
If you take more loans to pay off the previous ones, you’re already in a debt trap and it’s very difficult to get out of it one unless you win a magical lottery!.
The lenders give out the money with such high-interest rates due to the risks involved. They don’t have a guarantee that the borrower will return their money. It is risky to lend out money without the proper procedures.
It is safe to say that the payday loans do help people but they also lead to debt traps, the latter being quite common. The high-interest rates and short periods of payback time is what makes payday loans so risky.
For a short period and an extreme emergency situation, payday loans are really helpful as they get approved within a day and the money is directly deposited into your bank account.