During Tough Economic Times Payday Loans Can Help - As Long As You Are Careful!

Online, May 24, 2010 (Newswire.com) - Depending on who you ask - payday lenders are either a manifestation of evil or simply a short-term service offered to credit-challenged consumers that cannot obtain a traditional loan. While the rates and fees charged by typical payday lenders can translate to a whopping 400% APR, payday loans were never designed to be a long-term solution but, rather, a short-term fix for an emergency cash flow problem such as an unexpected or higher-than-usual utility bill.

Payday loans can be helpful when you are experiencing temporary cash flow problems or are facing a financial emergency and need money on a short-term basis. You should always attempt to pay your loan in full when it is due. If you are unable to pay the loan off completely, be sure to pay at least part of the amount financed before you renew the transaction. Consumers can find themselves "trapped" in a costly cycle if they keep renewing a payday loan without paying it off as soon as possible.

For example, a loan of $300 may cost you a fee of $45 for up to two weeks. If you are facing an emergency - the $45 probably seems reasonable. Renew the loan four times without paying it off, and you have incurred $180 in fees and still owe the original $300! Some lenders will let you renew the loan almost indefinitely or even issue multiple loans.

With the economy in turmoil and more and more Americans experiencing cutbacks and outright layoffs at work - an ever larger number of people are finding themselves living paycheck-to-paycheck. Savings reserves are shrinking or disappearing entirely for many families. One unexpected or larger-than-usual utility bill can be the undoing of months of careful budgeting! If you do find yourself the victim of an unexpected budget crisis, a payday loan service may offer a short-term solution that works. More than one in five people between the ages of 18 and 34 report having been refused credit within the past year, according to a recent study.

In today's difficult economic climate, more people have turned to non-traditional lenders to obtain personal loans. While banks - the traditional source of credit have struggled and sometimes failed altogether - credit unions, small banks, private money lenders and finance companies often still have the ability to make loans and be more flexible in the approval process. Payday lenders offer a valuable service - so long as the loans are used appropriately for the purpose for which they were designed! Payday loans are not a substitute for careful money management or long-term financing.

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