The demand for personal loans has grown in recent years, as it seems everyone is searching for a way to make ends meet. When something comes up unexpected and you just need to make it through to your next paycheck, a payday loan looks very promising. You get the money you need right away, and you can pay it back when your check comes in. This is very appealing to many people, but there are some claims that this type of personal loan can be very dangerous. What is the truth?
The Dangers of Payday Loan Programs
There are some clear dangers when it comes to this type of personal loan, but the dangers do not present themselves for all borrowers. Those who typically get into trouble are those who do not plan ahead of time to make sure they can repay the loan in the time frame agreed. Every payday loan establishes a date by which the loan must be repaid, and those who do not carefully plan out how they will ensure that happens are the ones who typically find themselves in trouble in the end.
So, what are these dangers? Here is a quick list of problems some people do come across when taking out this type of personal loan:
1. If you are unable to repay the loan by the due date, you are faced with high fees that make it even more difficult to repay the loan.
2. Some will take out a second loan in order to cover the first personal loan, which doubles the problem when they are unable to repay the loans.
3. The timeframe to repay a payday loan is much shorter than the length of time given for many loans extended through banks and credit unions. Some do not think about this when determining how much to borrow. They borrow far more than they can afford to repay out of their next paycheck.
Notice that all of these dangers can be completely eliminated with a bit of forethought. Those who think about the time frame given for repayment, and then only borrow what they can afford to repay, tend to have very different experiences. They tend to find payday loan programs to be valuable, rather than dangerous.
Taking the Danger out of a Personal Loan
There is a difference between needing a loan, and responsibly taking out a loan. Anything that you agree to financially will come with dangers. Buying a home is dangerous. Investing in an engagement ring is dangerous. There are definitely dangers in the loan business as well, but they are not dangers you cannot overcome.
Before taking out a personal loan, you have to learn the terms of the deal and ensure you can follow through with your end of the bargain. If you feel confident that you can repay the amount you will be borrowing plus the interest within the time frame agreed upon, then going through with the loan probably doesn't hold a lot of danger for you.