My Negative Position On Payday Loans
As many potential guest posters have learned by now, I have an intense hatred for the concept of payday loans. I thought it was time to write about it so that, hopefully, it will prevent more people from sending me material wanting to promote it or any website that offers it.
What payday loans offer people is the opportunity to basically take out a small loan based on the “fact” that they’ll be getting paid and will be able to immediately pay back the loan. In theory it sounds like it might be a good deal because if you wanted to go to a concert on Thursday night but you didn’t get paid until Friday, you could borrow the money for the concert and pay it back when you got paid Friday.
My problem with it is that it’s predatory on so many levels. What are those levels?
1. It caters to those that don’t make much money. Let’s face it, rich people don’t need anything like this.
2. The interest rates can be phenomenal. You’re not getting a loan for a nominal 5% rate; who’d make any money off that? In some instances your interest rate will be as high as 400% as an annual percentage rate, possibly more.
3. They could lie to you about how much you have to pay and how often. It’s so bad that the Federal Trade Commission has sued a bunch of them for violating federal law.
4. Many of them want access to your bank account to withdraw payment automatically. This is always dicey to begin with but these folks could really hurt your bank account with untimely withdrawals.
5. What happens if you can’t pay them? What if you lose your job and suddenly have to extend the time on the loan? What if there’s a hiccup in your pay?
You know what? If you want to do a payday loan you’d be better off going to a loan shark. Sure, it’s more dangerous, but he’s not going to ask for access to your bank account.
My advice; don’t even think about doing this. There’s always another way to get some temporary money if you absolutely need it, and if it’s just because you “want” something,… you should have saved up for it. Be safe and smart with your money.

This post has 9 comments
May 21st, 2012
For sure the worst choice, I doubt that anybody with a bit of common sense will take that kind of loan, just borrow the money from family or friend.
May 22nd, 2012
Actually Carl, it seems to be somewhat popular, which is why I decided to write my opinion against it. I can see the appeal, but the dangers, in my opinion, supersede that.
May 29th, 2012
Unfortunately, I have seen people get caught up in this. It seems that they encourage people to “renew” their loans, charge even higher fees, and offer more money to get them in deeper. Borrow from family or pawn your TV– but DO NOT get involved in this scam!
May 29th, 2012
Exactly Denise. I’d hate myself for promoting something like this, as there’s nothing altruistic about it, and it preys on the wrong people.
July 17th, 2012
I’m agree with you – high rates are very dangerous for people who don’t earn enough money and who have permanent problems with money. But I think payday loans have some positive moments, f.e. sometimes we have situations when we need money urgently and we don’t want to ask for them from family. Who can help us? Payday loan is one of the variants. It’s my opinion.
July 17th, 2012
I just can’t agree Mark. I know that people have their right to do even stupid things and that’s how I see this. It takes advantage of people who are desperate and that’s a horrible way to live, and I believe that any company that does this could care less about the well being of the people who go to them.
September 11th, 2012
But it’s funny Dave that you’re promoting them yet aren’t sure that you’d recommend anyone to take one out; isn’t that kind of a conundrum? In any case I certainly can’t put myself into everyone else’s situation, but to me if a person gets so desperate that they decide to go for one of these things then they’re probably not the right person to be going for it to begin with. I would hope they’d try to find a different way, even if they had to start selling some of their stuff.
December 13th, 2012
I agree that payday loans are one of the most terrible choices you can make when looking for money to cover some unexpected expenses. There’s so many things you have to be careful about and the APR is ridiculously high. I think many people still use them because they are not aware of the alternatives that work just as well and are much less in a position to seriously harm you home finances. Payday loans are simply easy to find and most people will use the first solution that they think will solve their problem, especially if they are in a hurry.
December 16th, 2012
I’m bothered that Montel Williams is pimping for one of these companies. You can put a pretty name on it, hire a big time name, but it still stinks of scam.