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Fast Loans
Fast loans are most often known as payday loans. There are, however, personal loans and business loans that are called “Fast Loans,” but when most people refer to fast loans they are referring to payday loans.
A payday loan or fast loan is a form of loan that borrows against your upcoming paycheck. When you apply for a fast loan, you write a personal check to the lender for the amount of the loan. In addition, you are usually charged a fee. The personal check, comprised of both the loan amount and the fee, is held until your next payday. The money can be deposited directly into your bank account in a matter of hours, or they can put the cash directly into your hand. Either way, you can get your loan fast.
Fast-loan companies allow people to “rollover” their checks. This means if they can’t cover the cost of the check written to the payday-loan company, the borrowers pay a fee to extend their loan. Let’s say you want to borrow twenty dollars. You write a check and pay a fee of five dollars. You have fifteen days to cover that twenty-five dollar check. Pretend that fifteen days have passed. Oh, no! You cannot cover that check. The fast-loan companies will allow you to pay a fee in order to extend your time. Usually, it would just be another five dollars. However, there is no set rate for what these companies can charge. Sometimes, it is based on the market interest rates of any given day. A twenty dollar loan can soon turn into a towering stack of debt.
Fast loans are dubious at best. Many of these fast loaners charge outrageous amounts of interest, sometimes up to five-hundred percent. These loans target low-income people who have bad credit and little help. People who rely too heavily on fast loans often find themselves in a cycle of taking out new fast loans in order to pay off fees from their initial fast loan. In fact, the Federal Trade Commission has issued a consumer alert [link] that urges citizens to consider alternatives to these fast loans. Some of their suggestions are getting a small loan from a bank, rearranging your budget and talking to a credit counselor.
Fast loans are a dangerous type of loan, but they might be good in a pinch. These loans target people who make only a few hundred dollars a paycheck. So, in theory, someone who makes a great deal more than that could probably get a payday loan without much risk to themselves as long as the loan isn’t over a few hundred dollars. There are few scenarios where I can see this happening, however. The more money a person makes, the easier it is for that person to get credit and to make more money. High-income wage earners are less likely to need a fast loan.
It is always harder for people who earn low-income wages to get out of debt. That’s why these loans are so dangerous, because they don’t target the white-collar workers who make decent salaries. They target the poor day-laborers who are barely eking by as it is. These loans are not just fast. They can also be quite brutal.
For the most part, stay away from these loans. There are better alternatives out there.
Topics: Payday Loans |
