Many California residents are struggling financially. Are you one of them? There is nothing easy about battling to make ends meet, but living from paycheck to paycheck is a reality for numerous individuals. When money runs out, the need for help and debt relief options is understandable. However, some of the options out there do more harm than good.
Payday loans have been a popular form of financial assistance for quite some time now, but why? Do they really help people, or do they cause more economic distress?
Payday loan basics
A payday loan, in short, is an advance on one's upcoming paycheck. The amount you would have to pay back, though, would include interests and fees, which are usually quite substantial
Lenders market payday loans toward those who just need a little extra money before their next paychecks. Funds may be short due to unexpected expenses, emergencies or overspending, among various other reasons. As lenders issue these loans instantly upon approval, they get people the money they need fast.
You may obtain this loan type in one of two ways: in a brick-and-mortar store or online. You simply fill out an application, and if your loan is approved, you'll get your funds the same day. In order to receive funds, however, you will need to fill out a post-dated check in the amount equal to the loan, lender fees and interest. The lender will cash this check on your next scheduled payday.
Sounds good, right?
Getting instant cash may sound like a great thing. However, if you really think about it, the fees and interest on these loans can make them impossible to pay back. If your next paycheck is not enough to cover what you owe, what would do?
Sadly, this is the reality for most who take out payday loans. Those who are unable to pay back their original loan often end up extending or borrowing more, creating a dependency on the lender and entering a cycle of borrowing that is difficult to break.
Payday loans are not the only option out there for people who need a little or a lot of financial assistance. Some better alternatives to payday loans include:
- Living within one's means
- Taking out conventional loans
- Taking out personal loans
- Seeking help from friends or family
Those who are struggling significantly can even turn to legal debt relief options such as bankruptcy.
Get real help
As the saying goes, "If it sounds too good to be true, it probably is." This is something that can certainly apply to payday loans. They sound great in a moment of monetary desperation, but they will generally put you in a worse financial state than where you started.
Bankruptcy and other forms of debt relief that will actually improve your situation may be available to you. An experienced bankruptcy attorney will be able to assist you in finding the best option for your circumstances.