Being in Debt Is Bad, but Falling Deeper into Debt By Trying to Climb Out Is Worse

Cheap loans

You know that online loans, most commonly payday loans, are risky. You only have to scratch the surface of the internet to find multiple warnings, cautionary tales, and articles lambasting the offers of these cheap online loans. However, these online loan centers would not exist if they were not needed, and therefore it is important to be educated before acquiring cheap loans that could cost you more than you ever expected.

1. Consider the statistics and the risks.

The top five payday loan lenders are Ace Cash Express, Advance America which is no longer in business, Cash America, CashNetUSA, and Check N Go. Their average APR interest rates are 792 percent, 533 percent, 533 percent, 664 percent, and 662 percent respectively. Before you make a decision, check their Better Business Bureau ratings.

Is it worth doing business with any company that has an F rating, and has had alerts issued about their business practices? Keep in mind that the largest payday loan companies in the nation have earned approximately 1.5 billion dollars in revenue from their lending practices.

2. Consider if a payday loan will be part of the solution, or part of the problem.

If you are normally able to pay your bills, but some crisis has emerged, then in some cases a payday loan could get you the quick cash that you need to take care of it. However, being chronically short of money is not something that a payday loan can fix. It may be more worth your time to ask for a raise

3. Consider your other options.

Check with local non profits to see what resources they can suggest beyond online loan centers. If you are unable to afford groceries, almost every single county in the United States has a food pantry. If you are unable to make a mortgage payment, some lenders may be able to help you by refinancing your mortgage or working with you on a different payment plan. If you are short for personal expenses, is there a good friend or relative that might be able to give you a quick personal loan?

The important thing is not whether you apply for cheap loans online or not, it is how you approach the process. Many people suffer due to the terms of these online loan centers because they take out more than one, they do not consider other options, and they do not know the risks involved. Protect yourself and your finances by giving careful consideration to your decision.

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