Raingod’s Weblog

Snark spoken here

The Pay Day Loan Problems

In theory, payday loans should be a good thing. Short on cash? A quick loan until payday can come in handy. However, most payday loans have interest rates in the 300-500% range, and climb substantially higher if you defer your payment.  

I mention this, as I spoke with someone today,who started a vicious cycle with one loan for a modest amount, and ended up filing bankruptcy when their multiple loans totaled over 6000 dollars for loans totaling less tha 1200. Now, not only are they up the creek financially, their credit is demolished, their bank account closed, and a long battle to financial stability.

In these hard economic times, and the season we’re in, it’s easy to look for a quick fix.  However, with payday loans you’re likely to get yourself in a deeper hole, than what you were in the first place. In the years I’ve been in debt/budget counseling, almost 75% of people I’ve talked to, who found themselves in dire straits, had taken out one or more loans. 

Many states have already legislated strict laws on these services, and here in AZ there was a law passed this past election to outright ban them. 

There are many alternatives, but payday loans should never be one of them.


December 29, 2008 - Posted by | My Life |


  1. I agree, payday loans like any other loans/credit cards are risky. You always want to be careful with any loan you take out. You mentioned that the APR is anywhere from 300-500%. This is true, but very misleading. For a payday loan to really come out to be 300-500%, you would have to extend the loan for a year. Payday loans are until your next payday. You friend you are talking about, I am sure he also had credit cards with high monthly payments. He didn’t file bankruptcy just because of payday loans. If you take out a payday loan, PAY THE LOAN OFF. If you know you wont be able to pay it off on your next payday, DONT TAKE IT OUT! If you cant pay off your credit card at the end of the month, you shouldn’t have one. The only debt you should be in is from a car or a house. A payday loan is to help you get by until your next payday only.

    Comment by cash advance software | December 30, 2008 | Reply

  2. Payday loans are a lot cheaper than return check fee’s.

    Comment by cash advance software | December 31, 2008 | Reply

  3. Payday loans are extremely expensive. And so are check cashers for those without a bank account.

    Comment by cussedness | January 2, 2009 | Reply

  4. Wow. Yer friend cheated the bank outta $6,000.00 in a banking crisis. Nice move. Thanks. This is why America is go down hill. No one has any personal responsblty.

    I say we should bring back debt prisons. Anyone who takes money and wont return it is a theif and a fraud, they should be put in jail like the other criminals.

    Comment by angryxtian | January 22, 2009 | Reply

  5. Did you even bother reading the post, or did I use words with too many syllables for you?

    Were it not for the economic policies of Bush and his toadies, none of this would have happened.

    But I guess you’re too busy believing in an invisible man to do any research.

    Comment by raingods | January 22, 2009 | Reply

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