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Pay day loans why you should not get them

Updated on March 4, 2013

Break the cycle

Pay day loans are becoming very popular among people who have fallen in to financial hardship, but what they don't realize is, that pay day loans only put them in a cycle that they can not get out of.

You borrow money to pay some bills at 365% interest, then when pay day comes and they take out their payment, you go to another company to get more money because you no longer have enough to live off of. This cycle is very hard to get out of.

These companies are charging an exceedingly amount of interest on these loans which is costing consumers hundreds of thousands of dollars in interest. That is more interest than a mortgage, car loan, school loan, or personal loan.

These companies make it easy to rook in a person with the hope they can get by until their next pay day, but then their whole paycheck is going to the pay day loan company, then they are back to square one.

Can you go to jail for not paying back a pay day loan?

This question has come up a million times and the answer is no you can not go to jail if you do not pay back a pay day loan. Some states are considering pay day loans that are in default a felony but these charges have not yet been determined by the courts or states institutions. A lot of these companies are stationed outside the United States and if you read the fine print in your papers there is that little tiny sentence that states you can not be criminally prosecuted if you fail to pay back your loan. It's a loan! They may try to threaten you with jail time or legal ramifications but the most they can do is file a civil suit against you for the money you owe them.

Are you going to go to jail for not paying your mortgage or car loan? No and these loans are more stubstantial then a mere 500 dollars that was borrowed. I'm not telling anyone not to pay them back I am just telling you that you can not go to jail over a pay day loan.

How to not get caught up in the pay day loan cycle.

It's easy to go on line or to a cash advance store and apply for a pay day loan, but don't do it. It's tempting when you are low on money but you're better off borrowing on your retirement plan then taking out a pay day loan. These companies do not care about you or your family and they won't care when pay day comes that you won't have any money left after they take what you owe them plus their 365% interest.

I have known people who have had up to 5 pay day loans at one time and finally had to close their bank accounts to stop the cycle and pay them back at their convenience one at a time instead of all at once.

If you have pay day loans then I would suggest you open another bank account to have your check deposited in and call them and try to work out another way to pay them back. Sometimes if they have no choice they will decrease the amount you owe them or get rid of the interest just to get their money back.

Pay day loans are tempting, but love your family enough to not take one. If you do need to resort to a pay day loan, only do it once and pay it back before you decide to take out another one. It's easy to get caught up in that cycle but in the long run it will only cause you more financial hardship then you were originally in.


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    • profile image

      Lou 4 years ago

      This is happening every single day to undeserving people. It should be against the law and not allowed. Some states do not allow pay day loans and the rest should file suit.

    • Au fait profile image

      C E Clark 5 years ago from North Texas

      Pay Day Loan companies should be illegal. A few years ago a coworker was telling me that she had borrowed money to pay her electric bill from one of these places. 2 months after borrowing the money she had to pay back more than twice the amount of her electric bill! That's highway robbery. Taking advantage of people when they're down, and this coworker I'm talking about was in her 70s on social security.

      Glad you are shedding some light on this subject.

    • Rtimes profile image

      Rtimes 6 years ago from Placerville, California

      pay day loans stopped doing business in Colorado because that state set an interest limit of 400% and well they just couldn't profit with that kind of state imposed limit. They are an outrage and the prey upon the poorest and most in need.