Disclaimer: If you made it this far, you’re probably wondering why I would give this advice, and you’re absolutely right! We here at MMFAS strongly advise against payday loans, but you can get them at your own demise…anyways…on with the pitch.
What is a Payday Loan?
Payday loans are very short-term loans where the borrower is expected to pay off the loan with their next paycheck, hence the name “Payday Loan.” These loans are infamous for the their high interest rates (often well over 100% APR, sometimes closer to 400% APR) and outrageous financing charges (often $15-$30 per $100 loan).
Why Would You Ever Want a Payday Loan?
Strapped for cash? Waiting for your next big commission from a freelance project? There are any number of reasons why you might think you need a payday loan. Although you will get the cash upfront, you will be paying a huge (did I mention extremely large?) premium to do so. Use at your own risk to feed your short-term consumption habits just like the rest of America.
Alternatives to Payday Loans
Although there isn’t a better alternative to just spending less, if you truly are in need of cash and can’t seem to quell that inner monster telling you to buy that brand new Lambo, here are some other options:
- Get a loan from a friend or family member – At least you can negotiate the interest rate here
- Get a cash advance from a credit card – The rates and finance fees are literally 10s of times better than a payday loan
- Get a home equity loan – If you have some equity in your home, you can always get a loan of credit with the house as collateral