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So You Want to Borrow a Payday Loan: The Resulting Consequences

Updated on April 22, 2017

Taking out a payday loan to pay bills can seem like a simple and easy solution to people who are caught in a financial squeeze between paychecks. However, the decision to take out a loan and pay your bills can end up being a nightmare as far as your financial health is concerned.

A payday loan is a short-term loan designed to help you meet an immediate financial emergency until the next pay period, at which time you should repay the loan entirely. For example, if you are unable to make a rent or automobile payment due to shortness of cash, you can go to any of the checks cashing places across the country or just search and find hundreds of lending institutions online.

The biggest mistake that people make with payday loans is that they just don’t pay them back on time and end up paying extremely how interest until the actual interest exceeds their loan amount. This is insanity of the activity. Avoid getting a payday loan if you are unable to repay it during the next pay period. If you don’t you might regret it.


People borrow for many reasons.

For example, we may have trouble meeting:

  • Mortgage payments
  • Emergency care repair
  • Insurance
  • Grocery bills
  • Utility bills
  • Household repairs
  • Even minor medical emergencies
  • Simply to make ends meet


You see, people take out payday loans to satisfy a variety of needs. However, this immediate satisfaction of a particular need can turn into a real financial crisis if the loan amount is sustained over a course of several weeks.

For instance, if you take out a $600.00 payday loan with an interest rate of 18 to 25% every two weeks, you could be paying over $200.00 a month just to hold the loan. Now imagine holding the loan for six months, paying only $50.00 toward the principal. Wow! In about three months, you would have paid $600.00 in interest. Now the interest you have paid out equals the exact loan amount or principal you agreed to pay back. Unfortunately, you still must pay money toward the principal.

Therefore, consider the pros and cons of taking out a payday loan.

The Payday Loan Choice

Do You Think Borrowing a Payday Loan in Time of Financial Crunch an Intelligent Choice?

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  • Missed rent or mortgage payments
  • Lack of money for food or groceries
  • Repossessed car due to missed payments

Cons: Your decision to take out a payday loan could result in:

  • High interest and accumulated debt
  • Late fee penalties
  • Damaged credit worthiness

As a person who has borrowed many payday loans over the course of my career, I can tell you that if you aren’t prepared to repay the loan immediately, you will end up falling into a trap in which you will be paying extremely high interests.

The interests on payday loans can be enormous. If you get caught up in the paying- high- interest cycle, you will give away tons of free money, income that could be used to pay other bills or money you could place into some type of savings.


The bottom line doesn't take out a payday loan at all if you are able to take the financial blows of a few late asset payments and move forward. However, if you seriously cannot take the chance of getting your car repossessed or seeing your children starving of hunger, then you might have no other choice but to act. However, consider the consequences.

Alternatives to Payday Loans

Consider the charity of family and friends

Borrowing money from relatives can be a burden sometimes. However, you will be better off putting your pride aside and asking family for financial help. At least, you don’t have to worry about high interest and accumulating debt.

Consider Visiting Local Foodbanks

Don’t be ashamed if you must resort to asking for food. Local foodbanks in your community are designed to help those who need food or groceries. Be humble enough to do what is necessary to feed your family. This is heroic.


Consider holding a Garage or yard Sale

Gather up those items in your home that you really don’t use and have a yard sale. Send out flyers to your neighbors, friends, and strangers nearby. Maybe you can make enough money to cover some of those accumulating debts.

Consider getting a part-time job

The income from a temporary part-time job may be enough to help you get caught up on some of your most pressing bills. I remember times when I left a nine-to-five banking job and hurried to a custodian position to clean offices and vacuum carpets. Although I was tired initially, I got used to putting in a few extra hours for a small income that helped me catch up on bills.

Take advantage of the above options if you don’t want to get entangled in the payday loan jungle. Attempt to negotiate with your creditors regarding a reasonable schedule for catching up on your most vital bills. Many creditors are willing to work with you if they see you are honest and willing to work toward improving your financial situation.


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