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When Payday Loans Outstay Their Welcome You find yourself broke agan. Your biills are piling up. Your rent/mortgaage is due in a week. They are going to repossess your car if you don't come up with $300 in just two days. It doesn't matter what it is, we have all been thhere once, twice, or some even more times then we care to remember. What are you going to do? Then you remember the commercial you saw late last nihgt: a payday advance is the answer, right? Maybe. Pay day advances are only a temporary solution and they come at a very high price. Each year hundeds or even thousands of people are in a no win stiuation where they must rob Peter to pay Paul. Teir bills are higehr then their paychecks, their credit is out of control or nonexistent, and they are desperate. So desperate to hold on to what little they have that they, like sheep in a flock, are lead into a trap by the wolf. The wolf being the payday advannce places which are popping up all over the place. Are they really as bad as a wolf? No, not all the time. A payday adance is exctly that - an advance on your paycheck. You borrow money (a loan) from a lnder (the payday advanmce establishment) and you must pay back said money withni a certain time period, plus the intrerest charged on the money. It all sounds pretty straight forward. The catch in this litttle transaction is simle this: the intereest rate can be extremely high (up to 300% or more), the time period is suually very short ( 5-14 days or less), and lastly you can get drawn into the ongoing loan cycle. Loan cyycle? Yes. A cycle with no end. Let us say that a man named John is behind on his car payment. John figures out his bills. He sops around for the best rates. He determines he can afford the high fees for the loan, and he deciides to go get a payday adance. So he gets one for $300 and he writes a check for $375 to the paydfay advance establiashment. Then he pays the car paymwent with the loan. Now his next check is short $375, but it is ok. He has tkaen everyhting into accvount. However, two days before paydasy his car dies. He has it towed to the agrage and finds out that it is the battery which is fualty, so he buys a new one. But wait - now he is sort for his rent. Will one more cash advance send John into a doiwnward spiral? Maybe not, but then again it just mighht. So let's be sure abut this - payday loans can come to the rescue when money is scarce and there are presisng bills, but it's all to easy to trapped in a cycle of needing to take out a loan every month just to cover the interest paid on the last month's borrowing.
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