With so much press about payday loans being a form of subprime lending, or articles saying that payday lenders are targeting the poor and elderly, you might get the wrong idea about payday loan consumers. They’re not necessarily old, poor, or uneducated. Many are hard-working middle-class Americans who simply struggle sometimes living paycheck to paycheck.

After the credit crunch zapped most borrowers in the midst of the worst recession we’ve seen in almost a century, the reality is that people make use of credit when and where they can find it. Using credit has become standard in our society as a way of getting ahead. Overusing credit, however, has also become standard for too many of us, who break out the plastic to buy things we simply can’t afford, hoping that we’ll be able to keep up by making minimum payments.

As PersonalMoneyStore.com recently shared on its website, the average payday loan customer might surprise you. Their average customer was stable, having lived at the same address for three years and worked at the same company for six, they were in their mid- to late-thirties, and many of them were homeowners.

So where does all this concern over consumer protection come from? The main problem with payday loans is the high interest rates they charge. When viewed over the course of a year, interest rates are typically 300% or more. That means a payday loan will cost you three times the amount you borrow – if you borrowed that amount for a year.

Payday loans don’t operate that way, though. They typically have to be repaid on the customer’s next payday, which causes people to think differently about interest rates. Customers don’t look at interest from an Annual Percentage Rate (APR) perspective, but tend to think in terms of X number of dollars per hundred borrowed instead. Since the loans are small, the actual amount of interest being paid also looks small, that is if the borrower pays the interest only once.

That isn’t the way it usually works out, though. It’s far more typical for customers to roll over their payday loan at least once, and it’s typically a lot more than that. In fact, the average customer rolls over their short-term loan around 10 times before it’s paid in full. Do they know this in advance? It’s hard to say.

Many consumer advocates as well as those in the government are concerned about payday lenders draining American’s wallets for what is assumed to be a short-term loan product. Although the terms are clearly spelled out, and most customers spend a good amount of time reviewing the information, customers are still out plenty of money for payday loans that drag out over months. To relieve this problem and give consumers protection, many states have enacted payday lending laws that help those in debt. To learn more about the payday lending laws in your state, visit this state-by-state guide.

Payday loans are small, short-term personal loans usually secured by a post-dated check or ACH withdrawal from a personal checking account. All that’s needed in most cases is a copy of your most recent paystub, and you can get payday loans fast either in person or online.

Although they are often marketed as a cash advance, payday loans are not as simple as that. If you got a cash advance directly from your employer, for example (something that almost never happens anymore, unless you are lucky enough to work for a friend or family member) he or she would simply pay you a little bit early. There would be nothing to pay back, because it’s money you’ve already earned, or will earn.

With a payday loan, you’ll have to pay back the original loan amount, plus interest. “That sounds reasonable enough,” you’re thinking. While it’s true that paying back the principal plus interest is the typical arrangement for a loan of any kind, the amount of interest you’ll pay on payday loans is far higher than what you’d expect to see for any other type of lending, even high interest credit cards.

To make matters worse, most people who take out one payday loan usually end up renewing it many times, on average for about six months. In the end the interest they will have paid is often more than the original loan amount, and the costs have set them back considerably from their original financial position.

So why are people still taking out payday loans? The answer may not be simple, and there are several reasons people are still using payday loans.

The first reason is convenience. Payday lenders are spreading through neighborhoods and setting up shop right next to grocery stores, convenience stores, and liquor stores. They have longer hours than other financial institutions, and they are readily accessible online at any hour of the day.

The other reasons that payday lenders have been so successful are less clear. Many people think they don’t have good enough credit to qualify for a lower interest personal loan from a traditional lender, even in some cases when they might be eligible for a traditional loan. In addition, most people believe they will be able to pay back the loan right away, that they’ll avoid getting sucked into the cycle of debt that has made payday lenders so successful. No one wants to think it will happen to them.

As with any loan, be cautious and always read the fine print. Examine the alternatives before you take out a payday loan.

When used wisely, payday loans can be a great comfort in times of emergency. They offer a service that can’t be matched by traditional lenders, and the speed and convenience of payday lenders can help customers escape financial nightmares.

Everybody loves the promise of easy money, but people in desperate need of cash can sometimes be drawn into a trap with payday loans. As with any financial product, you must be prudent when using payday loans. Always examine the repayment terms and interest rates to avoid falling into a cycle of debt, and follow our tips for using payday loans safely.

1. Don’t use payday loans for optional expenses. If you want the money, but don’t need the money right now, try socking away a few dollars from every paycheck. Saving for the things we want is an important step toward financial independence.
2. Borrow only what you can afford to repay. Most people operate on a budget. They know when bills come in and when they have to be paid. If you know can borrow from your next paycheck (which is essentially what a payday loan offers) without putting yourself behind, go ahead and do it. If, however, you are borrowing money that you have no way of repaying, you will be more likely to get caught up in a debt cycle that quickly spirals out of your control.
3. Consider other options. Payday loans come with extremely high interest rates for the services they offer. If you have decent credit, even if you have a few blemishes on your credit report, you may be able to qualify for a personal loan from a bank or other lending institution. If you’re not sure how good your credit is, consider buying a copy of your credit score or use this credit score estimator.

If you find yourself facing a financial emergency, it’s important to deal with the situation right away, but you shouldn’t panic. Depending on the amount of money you need and how long you have to put it together, you may have options you’re not considering if you’re in a state of panic. Borrowing money from friends or relatives can cause a strain on the relationship, but paying it back promptly will smooth things over nicely.

If you need the money to pay a bill, try working with your creditor. Explain your financial situation and see if they will make payment arrangements with you to take care of the account.

Payday loans can be a useful tool when dealing with financial crises. As long as you know you can pay back what you borrow, and you’re using the money only for things you absolutely need, they can be a great tool to save you from life’s other hassles.

You’ve been rolling over one payday loan after another, never sure when you’ll be able to get rid of the debt completely. The money you’re paying in interest charges every payday is taking a serious bite out of your funds, and you’re desperate to get out from under the shadow it has cast over your life.

Take heart, dear reader. You can pay off your payday loan, but it won’t be easy or quick. Quick and easy is how this mess got started after all, right? To dig yourself out, you’ll need a plan and the commitment to pay back the loan once and for all.

1. The best option for repaying your payday loan is to pay it off with your next paycheck. This was the original idea, anyway. If you can find other ways to meet your financial obligations for the next few weeks, you may be able to get out of the payday loan cycle of debt. Put off another bill, ask if you can borrow money from a friend or relative until you’re back on your feet, do whatever it takes to get rid of your payday loan now.
2. If you simply can’t pay off your payday loan in one fell swoop, make payment arrangements. Some states protect consumers with payday loan laws that allow customers to make payment arrangements if their loan has been rolled over a certain number of times. If your state doesn’t offer these protections, contact your lender and ask if you can make payment arrangements.
3. If you can’t make payment arrangements with the lender, make them with yourself. That’s right. You can set up a plan to eliminate your payday loan in a few short weeks by rolling over only a portion of the original loan. Try reducing your payday loan by 25% for the next four pay cycles. You will still be hit with interest charges, but they’ll be smaller and smaller each pay period. In a month, you’ll be out from under the shadow and on your way to financial stability.

It’s easy to get sucked into the lure of easy money that payday lenders dangle in front of cash-strapped customers. Don’t blame yourself for getting stuck in a cycle of debt. Most payday loan customers end up rolling over their debt for months, some do so for years. Instead of beating yourself up over it, make a plan now to rid yourself of the debt.

Payday loans have received a really bad rap, especially in recent times. The idea behind a payday loan, if you’re on of the wise ones who have left them alone, is that you borrow a small amount of money (typically no more than 80% of an average paycheck), accept the fact that you’re going to pay a shitload of interest compared to other loans, and pay the loan back as soon as you pick up your next paycheck.

The reason so many people are up in arms about payday loans is that they do charge exorbitant interest rates and tend to trap people into a cycle of repeatedly borrowing money. The interest rates advertised are typically between 9% and 14%, which doesn’t sound too bad until you realize that the interest rate does not use the standard annual percentage rate (APR) which banks, credit unions, and other money lenders typically use.

The interest rate for payday loans is simple interest. You pay back X% of what you borrowed, in addition to paying what you borrow, all on your next payday. The 10% or 12% loan you are taking out would be considered a 300% to 400% interest rate, if the payday loans company was using a traditional APR calculation.

The bottom line with payday loans is this: If you can get any other kind of credit, leave the payday loans alone. You don’t need all of that interest in your life.

However, if your credit is trashed, either because of your poor decisions and money management or because of circumstances beyond your control, and you find yourself in a bind when you need cash, and need it now, payday loans are a viable option.

Let’s face it, there have always been payday loan “organizations” around. It’s just that, before the business became legitimized, your collateral was your legs. If you didn’t pay up, Vinny and Tito were dispatched to have an ugly and often painful conversation with you about your lack of responsibility.

Payday loans are, in some ways, today’s loan sharks. But instead of sending someone to break your legs if you don’t pay, they hold on to a signed check for the amount you owe and simply deposit it themselves if you don’t show up and pay. If your check bounces, they take care of business through the court system. While no one wants to be dragged into court over a sum of money that doesn’t even equal a full paycheck, it beats the hell out of getting the hell beat out of you.

The bottom line with payday loans is that they’re an occasionally necessary evil. Use them sparingly and get out of them as quickly as you can.

Image by Micah Sittig

Many households across the world are in the firm grip of the credit crunch It comes as no surprise that unsecured, short term payday loans are becoming a more and more popular choice of credit.

Applications for payday loans are going through the roof. It is no wonder that many have started to wonder where all the money is going. What is it that everyone is spending their payday loan money on? What makes the high interest rates worth it?

1. The Right Reasons to Take a Payday Loan A look at when payday loans can be a good idea. Also covers when they should be avoided.
2. Good and Bad Reasons for Taking a Payday Loan A look at when payday loans are the answer to your financial questions and when they are best left alone. Helping people work out whether a payday loan is the right choice for them.
3. Take a Payday Loan to Help with a Cash Emergency A look at how short term lending options can be a last resort in cash crises. When should this option be considered?
4. Taking A Payday Loan to Keep Your Credit Clean A look at this and other things a payday loan can be spent for.
5. Pay to Survive a Work Hours Cut with a  Payday Loan Using short term credit to
6. Survive a cut in hours or other work related financial crisis.
7. Is a Payday Loan the Solution when Stranded Abroad Can those stuck overseas use a payday loan to fund them out of the situation? A look at the logistics of funding emergencies overseas.
8. Using Payday Loans to Beat inflation? A look at how short term borrowing can be used to help when times get tight. Are payday loans the solution?
9. The Best Reasons to Go For a Payday Loan? What should borrowers use payday loan to pay for? Some good and bad examples.
10. Use Payday Loans to Pay Urgent Expenses When payday loans can help bride a funding gap. Helping consumers out of a cash flow crisis.
11. Pay for the Basics With Payday Loans Funding daily life during low cash periods with payday loans. Good or bad idea?
12. Pay For Emergencies With a Payday Loan A look at this short term credit solution to unexpected financial headaches. Is payday borrowing the answer?
13. Use Payday Loans to Fund Student Lifestyle? Can students and recent graduates benefit from the payday loan format when short of cash?
14. Avoid Late Payment Fees By Taking a Payday Loan Is the short term credit format an economical way to avoid paying fines and charges? Should payday loans be used to pay other debts?
15. Pay Bills With a Payday Loan? Suggests that short term borrowing could be the solution in a cash flow crisis. Explains the process.
16. Can Payday Loans Help Pay for the Holidays? A look at the pros and cons of taking a payday loan to fund celebrations. Is this a good long term strategy?
17. Using a Payday Loan to Fund a Car Purchase? Motor loans experts examine the plus points and pitfalls of a payday loan. Is this a good way to pay for a vehicle?
18. Take a Payday Loan Just to Carry Cash? Is it worth borrowing against the next paycheck in order to be able to flash the cash? What are the ups and downs of this type of borrowing?
19. Payday Loans can Pay For Christmas? One lender encourages borrowing to enjoy the festive season. Why take a payday loan for Christmas.
20. Funding Festivities With a Payday Loan Can a payday loan help pay for Christmas celebrations? How can consumers get a payday loan for Christmas?
21. Payday Loans for Funding Bad Habits? Blogger warns against the dangers of spending money on cigarettes and alcohol in the middle of the month if it will leave consumers short of cash later on.
22. Payday Loan as Emergency Fund? A look at using the option of paycheck secured borrowing to fund unforeseen outgoings. Why payday loans offer a simple solution in this situation.
23. What Should Be Paid For With a Payday Loan? A look at the wrong and right reason to opt for short term credit of this kind. Sensible evaluation of payday lending.
24. Some Common Things to Pay For With Payday Loans A look at some of the reasons why consumers opt for paycheck credit advances. Including gifts, vacations and more.
25. Use Payday Loan to Pay off Loan Sharks A look at regaining control of borrowing by taking a payday loan to pay off less scrupulous lenders. Looking at the benefits of this option.
26. Paying for a Once in a Lifetime Opportunity With Payday Loan A look at some of the reasons people borrow against their paycheck and whether it is wise.
27. Pay for Vacations with a Paycheck Advance? A look at whether accessing short term credit against the next paycheck is the best way to buy a getaway? Includes alternative funding routes.
28. Use New Year’s Money to Pay For Christmas How Payday loans can fund the holidays, a look at why and how to take out a Christmas payday loan.
29. Buying Wedding Bands or Engagement Rings With Payday Loans A look at how short term credit can help couples get those rings on their fingers.
30. Pay to Get Away With a Payday Loan Funding vacations with short term credit borrowing. A look at the ways to pay for a break without breaking the bank.
31. Pay for a Car with a Payday Loan? A look at auto finance options. Includes overview of other ways to finance a vehicle
32. Use Payday Lending to Fund Things The Banks May Have Loaned For in the Past A look at why payday loans are so popular since banks put the lid on lending. Advice on how not to fall into the payday debt trap.
33. Payday Loans Perfect Way to Pay to Stay Away from Overdraft With bank borrowing fees on the rise, payday loans can be used to pay for things that may have, in the past, been funded by dipping into an overdraft.
34. Payday Loans Pay for Emergencies, Funs, Car Repairs and Guests A look at the diverse uses for unsecured paycheck credit. From the serious need to the treat.
35. Use Payday Loans to Pay Away Short Term Problems Avoid defaults by taking short term credit against future paychecks. A look at this short term solution.
36. Military Personnel Use Payday Loans for Medical Expenses A look at special military payday loans and the reasons service people take them, including medical expenses.
37. Five Things to Spend a Payday Loan On A look at some popular reasons for taking out a payday loan. What do people pay for with payday loans?
38. Canadians Use Payday Loans to Fund Unforeseen Outlay A look at the Canadian payday lending market and one popular reason for short term credit borrowing.
39. Pay For Family Emergencies With Payday Loans A look at how payday lending schemes can help fund families in times of crisis. Why should and how can families find payday loans.
40. Payday Borrowing Best For Unexpected Bills? A look at the trend towards borrowing against the next paycheck to make ends meet. Explains the popularity of payday loans.
41. People Paying their Way Through the Recession With Payday Loans A look at how short term lending has become a common crutch for the credit crunch consumer. What makes paycheck borrowing so popular?
42. Pay Santa with a Paycheck Advance A look at payday borrowing to fund the holidays and festive period. Why is this option popular?
43. Animal Lovers Using Paycheck Credit to Pay for Vet Treatment A look at why so many pet owners are borrowing from the future to fund four-legged-friends’ medical attention. Are there alternatives?
44. What Is A Short Term Personal Loan Hard times call for quick help some times. Can a short term loan be the answer?
45. Tips for Getting the Best Payday Loans Bad credit has no baring on the ability to get a payday loan.
46. Instant Cash By Leaps and Bounds Learn how a cash advance payday loan works.

Image Credits: stallio

Despite the bad rap that they’ve received, payday loans can be a real life saver for those without access to other forms of credit. If you’ve ever been in the situation when you needed cash fast and couldn’t get a standard loan, you know exactly what I’m talking about. Unfortunately, because the industry has some rather rampant abuse issues, this is an option which may not be available much longer.

Payday loans are intended to accomplish one simple thing. They are there to tide you over until you get your check when you run into a genuine emergency. Here are some examples of good and bad reasons for taking out a payday loan:

• Taking out a small payday loan to buy groceries because your kids need to eat may be a good idea.

• Taking out a payday loan because you’re out of beer (or malt liquor, or wine, or your liquor of choice) is a very bad idea.

• Taking out a payday loan to pay for car repairs so you can continue to go to work may be a good idea (assuming public transportation isn’t available).

• Taking out a payday loan so you can get new rims or spinners is a bad idea.

You shouldn’t take out more of a payday loan than you can afford to pay back with your next paycheck without needing to immediately borrow all of the money back again. Too many people get into the trap of borrowing as much as they can, then finding themselves in a bind when they need to pay it back because there’s not enough paycheck left to cover the week’s expenses. They end up borrowing the money again, ending up in a vicious cycle known as reloaning which often keeps people tied up for months at a time, paying exorbitant amount of interest.

Because some people have gotten themselves in over their heads with reloaning, and because some unethical lenders encourage the practice, several states have enacted laws governing the industry. These laws range from forcing lenders to disclose the actual annual interest rates to giving borrowers more liberal repayment options to outright banning payday loans altogether. If you live in an area where payday loans are still legal, make sure you use them carefully.

Image by AMagill

But just like the person who is forced to defend himself, sometimes life backs you into a corner that you have no way to get out of without immediate help. That’s where payday loans come in. When you need money now to cover a real need that can’t wait until you get your check, taking out payday loans can help you get out of a tight spot.

Here are some examples of real needs that merit taking out payday loans:

• Your car breaks down and you need a couple hundred bucks for the mechanic to fix it. Without the car, you can’t get to work and stand to lose more money than you would if you took out the loan.

• Your rent is due (or overdue) and you stand to lose your home. Some landlords charge more for late fees than you will pay by taking out a payday loan and paying it back with interest.

• A death in the family or other serious emergency requires you to travel, and you need to go now. If you don’t have the money, a payday loan may be a viable option.

Here are some very poor reasons to take out payday loans:

• You want to buy something. It’ll wait until payday. If it doesn’t, you didn’t need it very badly.

• You want to go on a date. I know she’s probably fine, but if she can’t hold off a week or two, you don’t want her. Trust us on this one. Someone that impatient will cause you more trouble than she’s worth.

• You want to go on a trip. If you’re broke before you take a trip, imagine how broke you’ll be when you get back. The only difference is that now you have to give up 60%-80%, plus interest. Bad idea every time.

Here’s the short version of the long story: If you need it and can pay it back, go ahead and take a payday loan. But make sure that you really need it because taking out money that you don’t need will come back to bitch slap you every time.

Photo via Mark Cartwright

Payday loans are tough to get away from when you need money but get paid less frequently than many people or else you do not have enough to get b on a day to day basis. Payday loans have very high interest rates, so it is also very easy to get stuck in a rut with them, like just when you get them paid off you need to take another one out. here are some interesting articles about payday loans and why there are so many military families being plagued by never ending loans.

1. Kentucky Responsible Lending – This blog has a lot of information about what the state of Kentucky is doing to protect the commonwealth, especially through capping payday loan percentage rates for the military families who have lost too much.
2. DebtFree4Ever – This financial blog talks about what the state of Kansas may do about the harmful effects of payday loans in addition to what Congress has done for military families.
3. Political Wag – This blog talks about the sudden popularity of payday loans and cautions military families about why they are harmful.
4. Real Estate Info – This is a blog about all of the debt relief solutions available to military families including payday loans and the dangers of their annual percentage rates.
5. Reed’s Blog – This is a blog about Texas regulations on payday loans and why it is necessary to protect military families.
6. Center for Responsible Lending – This is a blog about the payday loan industry and what Congress has done to aid military and civilian families.
7. Veteran’s Plus – A blog about how the US Army and their families are being ripped off by payday loans and interest rates.
8. Pert Loan Shopping – This blog is about military payday loans and their downsides.
9. The Daily Progress – A blog that is about a city in Virginia whose residents and military families is tired of being scammed by payday loans and proposes new protections.
10. Coordination Problem – This is a blog about why payday loans are considered predatory toward military families.
11. Victoria Advocate – This is a blog about military payday loans and the downsides of interest and repayment.
12. Proinvests – This is a blog about how payday loan companies bait and trap military families in debt.
13. WP Article Press – This blog explains how payday loan companies try to get more money out of military families through fees because of the interest cap.
14. Payday Today – This blog is an unbiased informational resource for military families about payday loans and what they can do to harm them.
15. Payday Loans Blogs – This blog talks about how payday loans target military families and the elderly with enormous interest rates.
16. APL Financial Advisors – this is an informational blog about payday loans and how they affect military families, what critics say, and examples of how they work to charge astronomical rates.
17. Loan Military Payday – This is a blog about the cautions to military families about payday loans and why they can be dangerous.
18. Romanian Travel Zone – This blog talks about the popularity of military payday loans and why they are risky.
19. Home Equity Loans Arizona – This is a blog about how military families are targeted for payday loans.
20. Special Education Degree – This is a blog specifically about military payday loans and how families may fall prey.
21. My Mi Refinance – This blog is about the problems with payday loans for military families and what the government is doing to aid those families.
22. Rebuild – This is a blog about payday loans, their dangers and how military families can get through financial troubles with alternative solutions.
23. Jrvoicewire’s Blog – This is a blog about military emergency payday loans and how they are a bigger problem for families than the debt itself.
24. Business Loan – This blog talks about the tactics used by payday loan companies such as employing retirees to get military families to take their high interest loans.
25. Home Business Dynamics – This is a blog that uncovers the problems associated with payday loans and military families.
26. Standard-Examiner – This blog examines why military families are vulnerable to payday loans and why they plague these families.
27. One Hour Loans – This is a blog that talks about the high interest rates of payday loans that plague military families and how Chicago senators are outraged.
28. Cash Advance Loans – This blog warns about the facts about payday loans and their dangers to military families.
29. Army AER Loans – The controversy behind military payday loans and how they prey on families.
30. Billeater – This is a blog about the dangers of payday loans and how military families can escape the trap.
31. Americans for Fairness in Lending – This is a blog about why payday loans affect military families and what the government is doing to help.
32. SpouseBuzz – This is a blog about the evils of payday loans and their adverse effects on military families.
33. The Family Wallet – This blog explains why payday loans are always a bad idea for military families.
34. AZCentral – This blog is about the problems with payday loans and how the government is trying to stop them in order to aid military families.
35. The Lost Albatross – This is a blog about predatory military payday loans and why they are a problem.
36. Life Lessons of a Military Wife – This is a personal experience blog from a military wife about the dangers of payday loans.
37. Payday Loan – This blog explains why payday loans are hurting military troops and their families.
38. Virginia Law – This is a blog about the problems the state of Virginia had with the payday loan industry and how it plagued military families.
39. Surveysdo – This blog examines why payday loans are not for everyone including military families and what has been done about them.
40. New Healthcare Bill Facts – This is a blog about the state of Oregon’s struggle with payday loans and their adverse affects on military families.
41. Payday Loans – This blog exposes payday loans as rip offs to military families.
42. Consolidation School Loan – This is a blog about how the payday loan industry takes advantage of military families and why they are targeted.

Image Credits: cell105

Of course, you shouldn’t borrow more than you’re going to be able to pay back (with interest) without putting yourself in a difficult spot for the next week. But, there are times when something you want or need to do just hits you a few days before payday, and taking out small payday loans won’t affect your ability to pay your other bills.

Payday loan companies are generally willing to lend you up to 80% of your average paycheck. But that doesn’t mean you have to borrow that much from them. When you do borrow, only take what you need. That way, you won’t find yourself in the sad situation of having to turn over 90% of your paycheck when you’re paying them back.

Here are some examples of fun things you might decide to do using a payday loan:

• Taking the kids on a trip during your day off. Let’s face it, for most of us, our days off and the days when we have money don’t always hit at the same time. Using a payday loan to cover the cost is OK as long as you don’t go overboard. Families need time to have fun together.

• Christmas or birthday shopping. Nobody should have to go without a present to open on their birthday or Christmas, especially your kids. If you need to take out a small payday loan to get them something, do it. Now, that doesn’t mean they need to get the most expensive toy on their wish list, but you can get them something nice without borrowing against your whole paycheck.

• Shopping trip. Much like the vacation, there are times when you get a chance to hang out with your friends, and they may not always coincide with times when you have money to spend. Taking out a small loan to have a good time shopping, eating out, or just hanging with your friends won’t sink you as long as you don’t take out more than you can pay back when you get your check.

Photo via Frazzled Jen