If you are struggling to make ends meet or pay debt obligations you may have considered a payday loan. After all, most payday loan lenders don’t require a credit check and many will give you money on the spot. While the appeal of quick money can be tempting, but there are several things you need to know about the risks involved with a payday loan.
Proceed With Caution
Payday loans are essentially a short-term, high-interest loan. You borrow money against your upcoming paycheck and must pay weekly interest rates, which can be as high as 400% of the amount borrowed! Many of the loans are structured to renew automatically each payday and will garnish a portion of your wages to satisfy payments. If you fail to make a payment or the payment defaults you can be charged thousands of dollars in addition to suffering swift credit damage when the default is reported to the credit bureaus.
There is a high rate of recidivism debt associated with borrowing through pay day loans. In other words, most people borrow through a payday loan once and then end up needing others to pay for the first one. It is a cycle of borrowing here to pay a borrowed debt there. Fortunately, payday loans are one of the easiest debts to have discharged in bankruptcy. If you or someone you know are suffering under the mounting pressure of a payday loan, speak to a Houston bankruptcy lawyer right away. You can get out of this costly debt spiral!