Wealth Building Lessons

For many people the ability to borrow $500 to fix the car or $200 to cover an emergency can be useful and is often highly appreciated. If your credit is bad (and even if its not) banks can be difficult and time consuming to deal with. The easiest and quickest solution is to get a pay-day loan.

And now you no longer need to go to one in person. Just do a search online and you’ll see thousands of online pay-day loan sites. However, you need to be aware of the draw-backs to using these online sites.
Often, since they’re outside your state, they won’t follow your state regulations. In case of a dispute, this can be a problem.

Some states have limits on how much interest they can charge like Minnesota, which is 200% per year!!! Others don’t have any limits and lenders routinely charge 1000% per year. If you think that’s usurious, you’re correct. But it’s perfectly legal in many states. Most of them will charge you 20% on a 30 day loan and more if it’s for a shorter time period.

The only criteria to qualify are that you have a job and a checking account. They won’t bother to see whether you can afford it. And for most people, paying twice the amount borrowed in less than a year is usually unaffordable. If you can’t afford the loan in the first place, how can you afford the interest payments?

So unless you need it for a really short period and know for sure its not going to be a recurring problem, it’s best to try and avoid pay-day loans altogether. They can really drag you down in the mud and make it virtually impossible to get out of.

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