Payday loans are often seen as short-term or emergency loans. They are taken out on an as-needed basis but carry a very hefty interest rate. In fact, it’s not uncommon to come across payday loans charging up to 400 percent interest, making it one of the longest running scams.
When you’re in dire straits, payday loans can offer smaller sums of money ranging from 100 to 1,000 dollars. Fees are generally charged based on the sum you borrow. In example, some places charge you anywhere from 15-30 dollars for every 100 dollars you borrow. How much you can borrow is calculated based on your paycheck and this is all granted that you are employed with a full-time job.
Payday lenders do not go easy on you if you don’t have the funds to pay them back. In fact, some go as far as withdrawing small amounts from your bank account until your debt is fully cleared. This does also affect your bank account and hits you with overdraft fees if you don’t have the funds.
Some people are shocked to find payday lenders contacting friends or family to collect their cash. The reality is that payday loans are a nasty scam that prey on those with limited means, but they are also a necessity when you need access to quick funds.