The trouble with a payday loan (from any Payday Loan provider) is their fees and their interest rates for late payment. There is no trouble as long as you make sure to pay off the loan on time and in full.
You have to be certain that you have taken the following steps before agreeing the terms of the small personal loan. If you understand what you have to do to avoid late payment penalties, and extremely high interest rates if you decide to “roll over” the payday loan. The trouble here is that these fees and penalties can really grow fast, and get VERY high. So stay “in the know” by asking the payday loan provider lots of questions up front.
The other trouble that payday loan borrowers come across is default collections. Most collection agencies are hired by payday loan providers to collect all outstanding monies and debts from their clients (borrowers). The trouble with these collectors is they often use tactics that not fair, and many time illegal. The collectors will use many different scare tactics, such as the possibility of being arrested, and/or jailed.
There are serious troubles with these fear tactics in that you cannot be jailed or arrested for defaulting on a payday loan. Many payday loan borrowers and clients buy into these scare tactics because they are not informed. Many payday loan clients are often called, or labeled as, “low information borrowers”. This is not fair in our books at the Wof. Making general accusations on an entire borrowing demographic is not accurate and not fair, BUT we do know that payday loan borrowers find themselves in desperate financial straights and they are often so desperate to get a loan, they don’t take the time to read all the fine print and “extra documentation” – which they of course should be doing.
Another big troublesome area with payday loan providers and payday loan clients, is multiple short-term loans. We at the Wof call these clients, “lilly pad borrowers”. These people borrow money from one Payday Loan company and then borrow again from another to pay off the debt. This means that the borrower is simply transferring the debt to another company, and the circle affect comes into play.
Eventually the borrower will get into serious debts trouble when they can’t find anymore Payday Loan lenders who will do with business with them. Then the trouble is they are now in a situation where they can’t pay back the money, and their penalty fees and interest rates will start skyrocketing higher and higher, and can eventually be the cause of a personal bankruptcy, or dire financial situation.
So if you don’t want to get in to any trouble at all – don’t get a payday loan in the first place.
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