Payday loans are small, short-term loans that come with a very high cost. High interest rates and fees combined with very short terms can make payday loans very difficult to repay.
According to the FTC, payday loans, also referred to as cash advance loans or check advance loans, typically provide a borrower with money until their next payday. When payday arrives, the full amount borrowed plus interest and fees is due. If a borrower is unable to pay the full amount, they must roll-over the existing loan into a new loan that carries additional interest and fees. Some payday lenders may automatically deduct the full amount due from a borrower’s bank account if they do not repay or roll-over the loan. This cycle can make payday loans expensive and harmful to a borrower’s financial well-being.
There are better alternatives that you should consider before deciding to take out a payday loan. These include reducing expenditures to avoid borrowing or overdraft protection from your bank. A small loan from your bank or a personal installment lender like Courtesy Finance may also be a better option. Personal installment loans generally have lower interest rates than payday loans and are repaid in equal payments over a longer term – making it easier to repay the loan. Courtesy Finance’s local employees have helped people in the communities we serve avoid payday loans since 2007. If you need help with unexpected expenses, get started by talking to a local branch today.
This is an excerpt from FTC: Payday Loans. Refer to the Money & Credit section of the FTC website for the full article and additional information on payday loans and other financial topics.