There are many risks associated with getting a payday loan. Most people get one when they’re in a financial crisis and aren’t thinking clearly. Yes, they can get money now, but what about tomorrow? On average it takes someone five months to pay back a payday loan. That means it takes them five times longer than their loan terms – 1 month is an average length.
What happens if you keep rolling over?
Imagine you get a $500 advance and are expected to pay $55 interest within one month. That brings your total repayment to $555 – Principal + interest. What if you roll over on that five times over the course of 5 months?! Now you’re four months late on your payment, not good… That’s $55 x 5 which comes out to $275 in interest. Now you just paid $775 back instead of $555.
Don’t let this happen to you because it is avoidable. Lots of people say that payday loans helped them out tremendously when they needed immediate cash. Medical emergencies, alimony checks, car repairs and rent are just a few reasons why. What would happen if you defaulted on those? Getting quick cash in a snap is extremely handy to those without credit.
Key demographics on average payday loan borrowers
The average demographic on people who apply for payday loans make less than $40,000 a year, have bad credit, and are divorced or separated. But there’re lots of other people to apply too. Over 12 million Americans apply for a cash advance every year. There is, of course, risks associated with it, but it you pay it back in full there’s no need to worry.
Is a payday loan a good option?
Payday loans are meant to be a short-term solution when you have poor credit and don’t have any other options. Use it responsibly and it can help you tremendously!