Payday Loans : Loan Loans

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Payday Loans Although, payday loans are intended to temporarily provide financial relief until your next paycheck; it appears to cause greater financial strain than what the borrower initially possess before securing a payday loan from a lender. The median income of a payday borrower is less than $23,000 ("Do Payday Loans Ever Make Financial Sense?"). In order to help you to process the hardship a payday causes in reality I will use my friend of mine who recently took out a payday loan. Shanice is a single mother of four children; although, she lives with her parent and pays ($80 monthly) for rent and her car note which is ($400 monthly). Furthermore, if you factor in ($100 monthly) gas, ($85 monthly) car insurance, ($80 monthly)…show more content…
Her check stubs tends to reflect on average no more than $40 per check. Therefore, we will deduct $80 monthly leaving her with a net income of $920.00. $920.00 – $946.50 = $-26.50 so you can see why someone like her would take out a payday loan. Shanice financial need led her to finance a loan for $100. The yearly APR is 350.77% and the finance charged is $272.87. She is required to make 5 payments monthly of $28.00 and one final payment of $132.87. Although, to someone in the midst of debt $28.00 monthly does not sound horrible; however if you take into consideration she is repaying 2.9 times what she borrowed and her current debt before the payday loan was $946.50. Now, her current monthly net income is $-54.50; it actuality Shanice cannot afford a payday loan. Before, securing a payday loan first a person must ask themselves what exactly is the loan? A payday should not be obtained in for everyday living expenses but for unexpected emergencies in order to avoid revolving debt ("3 Tips For Using Payday Loans"). Another question that a person should ask themselves beforehand is can you really afford to pay the interest fees? The interest fees starting at 237% can be extremely detrimental to someone finances that are already suffering ("3 Tips For Using Payday Loans"). Your total debt to the lender should be properly established before actually agreeing to the loan; it could be the difference between
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