“Overnight and instant fast payday loans with low interest, easy application and quick processing to cover up all your unprecedented expenses including bill payments, bad credit payments, etc. Apply now to avail the same!” How many such advertisements do we come across in a day? Though it sounds very attractive and easy way out to handle our unforeseen expenses, payday loans disadvantages do exist but they get covered up in those flashy advertisements that entice people to fall for them.

Payday Loan Problem # 1

First and foremost problem associated with availing fast payday debt is the high interest rates payable for the short term loan taken. The fee or interest payable may either be a percentage of the total amount or a fixed fee rate for every $ 100 borrowed. If one decides to extend the loan, for whatever reason, it attracts additional fee for every roll over. Research shows that the interest ranges from 390% to 900% (per annum) depending on the institution from where you borrow cash advance.

Payday Loan Debt Problem # 2

Another problem that crops up with payday loans is that the lender either gets a post paid check or a direct access to your paycheck account authorizing an electronic withdrawal on the due date which is usually your payday. Worse is that the interest rates keep increasing with extensions and these loans range for an initial period of 1 week to 4 weeks only.

Payday Loan Problem # 3

Financial institutions also assure loans for bad credit customer and allow cash advances for paying off existing debts. These payday advances are a means of trapping customers in to more deep debts and earn a lot by way of interest amount claimed from the customers. Most customers who borrow payday loans are unable to pay off within the required time, hence they need to pay additional interest. For someone who is able to pay back within time, pay day loans are very convenient. You can solve your financial emergency suitably. After all, you cannot borrow from relatives or friends all the time.