Nowadays providers of payday cash advance
USA are popping everywhere and a lot of people believe that these might be the best thing ever, but for some they might be the tabloids of credit industry, as far as any reputable credit institution is concerned. It is an obvious fact that they are supplying something tangible to satisfy the demands of the public, or else they wouldn’t have survived.
Most of the cash advance USA companies try to defend their position by a simple a statement that the services they are providing are needed by a lot of people. Sometimes life may deal you a bad hand filled with unexpected problems for which you need help. Problems like a car trouble or a medical emergency are the ideal situations when you would need fast cash and cash advance USA provide an unbelievably easy and quick way to solve such problems. However for many borrowers, it is a way of getting into a nightmare which works like quick sand and sucks you into a vicious debt cycle.
Now the question arises, if so many consumers are choosing to freely deal with cash advance USA lenders, then why are these loans considered bad by some?
Maybe the best way to answer the above question is to use your imagination a bit to create a life like scenario that is faced by many people. Let us consider that you have a young family with only one income source and five members to feed. The dad goes to office and works while mom stays at home to take care of the three children. The family is completely free from debt but they can barely make ends meet. Suddenly the car needs repairs and you need money in order to complete mechanical repairs. In such a situation cash advance USA might look like salvation, so why are they bad?
Payday cash advance in USA are popping everywhere
The family gets $500 at 17.5% interest which is to be charged every two weeks. If they can repay it in two weeks they have to pay $587.5. What is so bad about it? Most likely the family will be unable to repay the loan within the time period, at this point they would have to pay an additional $80.50 as interest. With that their new repayment amount comes up to $675. You can easily imagine how such a situation will spiral out of control.
At present the number of payday stores in USA is a little over 20,000. The industry virtually came into existence in 2010 and gathers over $4billion only in interest. Most people believe that payday loan vendors take advantage of people in times of crisis or when they are in desperate need of help. Most people in such situations fail to think clearly and are eager to get rid of their problems. Due to which it is important to do a complete budget of your monthly expenses and income in order to determine how much loan you can repay comfortably without defaulting.
Another drawback of cash advance USA is that they do not reflect a good report on your credit score. So if you are unable to repay the loan in the given time period, you might altogether jeopardize your credit score. Since payday loans charge notoriously high interest rates, they give a very bad impression to the whole industry. When compared, a standard credit card company will charge you an annual interest at 32%, whereas a two week payday loan which charges a 17.5% interest will accumulate to 455% per annum. The numbers can be even more staggering, making it essential that you use cash advance USA to meet your short term requirement and repay these loans as quickly as possible so that you have to pay least possible amount of interest.