How A $200 Payday Loan Turns Into A $2.500 Debt

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by Arnold Palmkey
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If you ever find yourself in an tough cash situation, a payday loan might be your best ticket out of there. Maybe your credit card has hit it’s limit and paying with plastic is not an option. If that’s the case, you can get a paycheck loan for some quick money. The money you get via the paycheck loan can be used to pay off your bills and you use your next paycheck to pay off the payday loan including interest.

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The paycheck loan is one of the fastest ways to get money, but it’s not inexpensive. And that’s the reason you should only use them when you have an emergency. When you have other alternatives, or you can wait a little longer, do it. The interest rates of a paycheck loan are high from the starting point and will get even higher when you do not pay back on time.

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Not paying a payday loan back on time is not a good idea. Payday loan conditions are set up in such a way that interest rates go up dramatically the second your payment is overdue. Trying to skip out on paying can have big consequences. A paycheck loan of $300 can morph into a burden of nine hundred dollars before your very eyes.

If you decide not to pay that total, the lender will go to court. Paycheck loan lenders have been in these sort of situations before, so have no doubt that they will go to the bitter end. It is highly likely you won’t win in the courtroom. This means extra costs added to your payday loan debt. Et voila, your nine hundred dollar obligation just grew into a $2.500 obligation.

Maybe you can’t pay pay that sum in full immediately. Not to worry, the lender will get a lien on your house. The lien will be put on your personal belongings if you don’t own a house. The payday loan lender will get his money one way or the other. It may even get you into prison in some states.

Be sure you can pay back a payday loan on time before you send in the paperwork. Don’t just close one out of financial desperation, because your situation will get even worse when you don’t pay back on time.

About the Author:
Arnold is a financial writer with articles about personal finance and loans. He also writes in Dutch about
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