Persuasive Essay On Payday Loans
If you've taken out a payday loan recently, you're not alone. Payday loans are extremely common in today's economic climate. In fact, according to a recent market analysis, there are more payday lenders in most areas than there are McDonald's restaurants. If anything, this should prove to you that no matter what emergency or extenuating financial circumstances have brought you to require a payday loan, your situation is completely normal.
However, since a payday loan is a loan against money you'll likely need to meet your living expenses and other costs in the future, you'll need to have a financial plan for when your loan is paid off. Otherwise, you run the risk of becoming a part of the repeat loan client base--which accounts for almost 98% of the payday loan …show more content…
Instead of raising your spending after the debt is paid, consider paying yourself the amount you paid to your payday lender in the form of a savings deposit. After a year or so, you'll have a significant financial cushion to help you weather future financial hardships.
Adjustment #2--Develop Your Own Credit
Payday loans are designed to be short-term loans. As a result, they often carry a one-time origination fee of $15 dollars per $100 dollars borrowed. If you calculate that cost over a year or more, the Annual Percentage Rate of the loan is approximately 400%.
This doesn't matter much to a payday borrower, because they'll pay the loan back on their next paycheck. That said, for expenses that take a few months or longer to deal with, traditional credit is often a better choice. Once your payday loan is paid off, try to develop a credit balance through a traditional credit company, or pay down any balances that you currently carry. That way, when an expense comes up that requires time to pay off, you won't have to use short-term loans to deal with it.
Adjustment #3--Cut Your
However, since a payday loan is a loan against money you'll likely need to meet your living expenses and other costs in the future, you'll need to have a financial plan for when your loan is paid off. Otherwise, you run the risk of becoming a part of the repeat loan client base--which accounts for almost 98% of the payday loan …show more content…
Instead of raising your spending after the debt is paid, consider paying yourself the amount you paid to your payday lender in the form of a savings deposit. After a year or so, you'll have a significant financial cushion to help you weather future financial hardships.
Adjustment #2--Develop Your Own Credit
Payday loans are designed to be short-term loans. As a result, they often carry a one-time origination fee of $15 dollars per $100 dollars borrowed. If you calculate that cost over a year or more, the Annual Percentage Rate of the loan is approximately 400%.
This doesn't matter much to a payday borrower, because they'll pay the loan back on their next paycheck. That said, for expenses that take a few months or longer to deal with, traditional credit is often a better choice. Once your payday loan is paid off, try to develop a credit balance through a traditional credit company, or pay down any balances that you currently carry. That way, when an expense comes up that requires time to pay off, you won't have to use short-term loans to deal with it.
Adjustment #3--Cut Your