Pay Day Advance Loans

The past decade has seen the rise of consumer debt reach all time highs. During this time period several niche financial industries have sprung into existence within the United States. One such industry specializes in pay day loans. These short term loans are primarily targeted at a portion of the poor and middle class who are in need of immediate money. Pay day loan specialists offer a cash advance until the customer. s pay day arrives. On the surface this sounds like a beneficial service to the financially burdened community. However, a closer examination reveals some alarming facts.

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Problems with pay day loans

Although pay day loans are completely legal they are ethically questionable at best. The APR (Annual Percentage Rate) of a typical consumer loan can reach 18% and credit cards can reach as high as 23%. Compare those rates to pay day loans which can reach levels that often equate to 350% up to 1000% !! Lenders try to justify these grossly exaggerated rates by stating that they are not rates they are fees, but the end result is exactly the same. Customers are often unable to pay back the loan and associated "fees" and therefore roll over the balance which results in additional fees. Others are able to pay back the loan but after paying out the fees they are unable to make it financially until their next pay check and so they end up taking out another loan. In the long run this pattern does not provide any kind of solution to the customer. s financial problems and often places them in a worse situation.

Alternatives to pay day loans

If using a pay day loan is not beneficial to the consumer than what are the alternatives? There are a number of alternate steps that can be taken to avoid pay day loans..

Ask creditors for an extension to pay your bills.
Prepare a household budget and eliminate unnecessary expenses.
Explore lending alternatives such as a personal loan from a bank or credit union.
Save the money that would be spent on fees to a pay day loan company. Use this money as an emergency fund.

If necessary contact a consumer credit counseling agency.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.