One of the easiest ways to get money when you need it right away is to get a payday loan. These loans are available in most places—and online—and they usually advertise how easy it would be to get one. A huge problem with these loans is that they often become debt traps for borrowers.
Payday loans go by many names and sound like a good thing to get. Other names include easy loans, same day loans, payday advance, payday loans bad credit, payday loans no credit check, and more.
A Predatory Industry
In most cases, the names of these loans indicate that they are easy to get—but there is no hint of how difficult it can be to pay it back. What they never reveal is that these lenders, according to
StopTheDebtTrap, make about 75 percent of their money from people who borrow from them more than ten times a year. These borrowers often cannot repay the loan without taking another loan from them. It is why many financial counselors have labeled the industry as “predatory.”
How Payday Loans Work
The borrower takes out a loan and writes a check to the lending company. It is dated for when the loan is due—with interest. Regardless of the borrower’s ability to pay for other debts and even food, the check is cashed. Since these loans are frequently to people with lower incomes, it becomes almost obligatory for them to take out another loan to make ends meet until the following payday—and the cycle of debt begins.
