by Amy Jackson
If you are an optimist, and many of us are, it is easy to think that a payday loan is the quick fix answer to a cash shortage. If you have found yourself borrowing money to repay a debt you may very well be in the vicious cycle of the payday loan.
What exactly is a payday loan? It is a relatively small loan, often initially a few hundred dollars, that is loaned to you at a very high interest rate with the intent that it will be paid back on your next payday. The key word here is “intent.” If the loan isn’t paid back, in full, the extremely high interest can turn a few hundred-dollar loan into a few thousand fairly quickly. These type of lenders don’t want you to repay the loan they want to renew the loan at a higher amount increasing the amount of interest owed. It makes them more money that way. Payday loans are some of the hardest debts to repay often leading to more and more loans of the same type.
If you have found yourself in this cycle consider discussing your options in bankruptcy. Don’t give up on being an optimist but don’t let the high interest payday loans be a financial burden either. Payday loans are unsecured debts that will discharge in a bankruptcy and break this cycle.