Eastside Lenders Talk about the Darker World of Pay Day Loans and How to Stay Light

Real Estate Agent with AAJ Property

Payday Loans can lead you into a financial maze

Payday loans, they are quick, easy ways to get a boost of cash. Easier to get than from banks, a million times quicker, and often the solution to just needing a little bit of money instead of a huge amount. Since the banks broke the world, fewer people trust in them, some people have no other choices for credit. However, payday loans have a dark side, and have even been called a form of “legal loan sharking” worth about 2 billion. The over use of these loans is becoming something of an epidemic in the UK. Why are these loans so dangerous and causing so much trouble?

The Interest

Interest Rate

This is the biggest part of a payday loan and what takes most by complete surprise. The interest on a normal loan is a small percent that you add to the payback of the loan over a period of time. Payday loans do not do this they have a large interest rate and are paid back in spans of days not years. This means that the interest owed on one can quickly come to be more than the cost of the original loan itself, this rarely happens with bank loans. This more than anything else lends to the vicious debt cycle. The interest rate is so high and accumulates so fast that this can be even worse than the debt cycle of credit cards.

Debt Cycle

Debt Ball

Forty-nine percent, almost half of the users of payday loans are unable to meet the high cost of interest payments on their loans. The means they have to take out payday loans to pay back payday loans, this is how the cycle starts. Once this starts it is very hard to get out from under. There is no limit to the amount of money you can owe, and unlike loan sharks since these are legal they can force payment. The interest rates can be between 300 to 500% the loan and in payments as small as per day. Additional fees and penalties can push this up as high as 5000% over the life of the loan though. Payday loans on top of payday loans, even so 28 percent believe this kind of debt was necessary for them.


Even with this crushing and seemingly endless debt cycle, or the feeling of necessity to get a payday loan, it is possible to get out. Planning is the main key, these loans are considered high risk for the lenders they want the money back. By planning a tight budget and working with the lender for payment options or to get the interest down you can get out from under the boot of a payday loan cycle. There are also free organizations that can help people manage debt. Pay attention ask about the interest rate, the payment periods, know how much the loan will be to pay back before you get one and budget for it. In this way it is possible to avoid the debt cycle and get out. If you are one of the unlucky ones that feels a payday loan is necessary you may be able to avoid the debt cycle all together by being prepared. By knowing about the dark side you can know how to avoid it.

Comments (3)

Dale Baker
Baker Energy Audits and Commercial Properties Inspections - Claremont, NH
New Hampshire Relocation Real Estate Information
Howdy and evening  James
Welcome to the ActiveRain Real Estate blogging community! You'll sure find a lot of mighty fine folks here in the community to get to know. I'm one of the many ActiveRain community members which are an ActiveRain Ambassador.
If you should ever have any questions about how to do anything or about the rules of the ActiveRain community, please feel free to contact me either by sending me a e-mail or by giving me a call, I'll sure be mighty glad to give you a helping hand. If for some reason I don't know the answer to a question which you might have, I'll sure will find out the answer and get back to you with the right answer.
Take the time to look at the different groups within the community, pick some different groups to join, post your blog posts in them, be sure to take the time to read the posting guidelines of each group you might want to join, folks sure will want to follow them. Members can join as many or as few of the different groups within the community as they would like to. Members are able to post their blog posts in 5 different groups at a time.
Keep up your mighty fine job of posting! I'll be looking forward to seeing even more blog posts written and posted by you, plus seeing you join some of the mighty fine groups in the AR community.
Have a good one
Dale in New Hampshire
Jul 10, 2013 09:06 AM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Welcome to Activerain and I hope you are learning a lot and if you ever need any assistance, don't hesitate to check out my blog, email me, call me, I will be glad to help you in any way possible. Also, check out the main page of Activerain and look for the Activerain University tab, there are lots of educational webinars to help you build your business.

Jul 10, 2013 03:15 PM
Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team
Ken's Home Team LLC. - Vancouver, WA

Welcome to Activerain from from all of us at Ken's Home Team. I think you will find this site to be a wealth of knowledge and referrals. This really is the best real estate blogging and real estate network on the internet. If you have any questions about Activerain, reach out to the wonderful Ambassadors here in the rain. (They are a wealth of knowledge and were picked by the Activerain staff for their willingness to help others)

Jul 10, 2013 03:20 PM