Saint Mary's Academy

Posts Tagged ‘Day’

Almost everywhere you look these days you can find advertisements for payday loans. And like other financial products, you can usually conclude that the more a product is advertised, the higher the profit margins it provides for the seller.

To get a pay day loan come under the guise of a variety of titles including; cash advance loans, check advance loans, quick cash loans, post-dated check loans, and deferred deposit check loans. But no matter what they call it, the product is always essentially the same.

Payday loan is small quantity, short-term, high interest loans. The way they typically work is that the borrower writes a personal check payable to the lender for the amount they desire to borrow plus the “loan fee”. The lending company then gives the borrower the amount of the check minus the “loan fee” in cash. So for example, if you wanted to borrow $100 for two weeks you might write a check for $115 and receive the $100 in cash.

A lot of people claim that pay day loans are a bad thing, and they can be, but they do serve a purpose. Not everyone has easy access to needed cash in emergencies or family and friends who can lend them money at a moments notice. Even if you do, not everyone wants to run over to their family and friends with their money problems.

When used responsibly pay day loans can actually be cheaper then having debit overdrafts or bounced checks from a bank checking account. When a checking account gets multiple overdrafts banks can and do charge up to $35 dollars per each item (which can result in hundreds of dollars in charges in one day). And in many cases banks start deducting the highest dollar charges first, meaning you could get many more overdraft fees then you expected.