|By David Pilley on March 18, 2011
Need cash? Get it now! With the thousands of advertisements you are bombarded with on a daily basis, this is something you probably hear a lot. And, just as the sheer number of ads has exploded in the past couple of generations, so too has the number of companies offering payday loans. Payday-today.us states that there were about 200 shops nationwide offering payday loans. Today, the number is at least 12,000, and the Internet is helping that number increase exponentially. It’s no wonder companies apply the tag “24-hour” to advertise just how easily you can have money in your pocket.
Simply typing the words “24 hour payday loan” into a search engine will give you page upon page of payday loan offers, but there aren’t enough articles explaining the loans themselves. Sure, it’s nice to see how easy it is to get a quick loan, but what the companies don’t tell you is it’s just as easy to end up paying back more on interest than the amount of the original loan.
Names like “paydayrightaway.com” and “paydayloans.com” (which is now “cashadvance.com”) seem auspicious in their bland nature. All you have to do to get a loan is fill out a simple online application. The application will ask for information like your monthly income, how often you get paid, and the type of bank account you have. (Cashadvance.com will ask for your driver’s license and whether you “rent” or “own”— a house, I presume.)
At the top of every application, of course, will be the amount of money you would like. This is a great advertising technique, since what they’re selling is what they want to be most visible. The possible amounts of money will also be listed, most commonly $500 to $1,500. The sites also advertise how quick and easy the application is by saying it will take just three minutes or so to fill it out, and the cash will be wired into your account by tomorrow, hence the “24-hour” modifier.
But these online lenders do not make the fees clear. If you don’t pay back the loan in time, the loan will be renewed, and interest will compound. Since interest rates on payday loans are usually in excess of 25%, the amount of interest can easily exceed the amount of the original loan if the loan is extended a few months. If your original loan was $100 with a 25% interest rate, you could be paying $650 in interest if the loan is not paid for an entire year. Since most payday loans offer between $500 and $1,500, it is imperative to pay back the entire loan when you receive your next paycheck!