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Payday Loans Testimonial
A Personal Look at Payday Loans
My New Year's resolution this year is to break one of my worst habits. I can't explain it very well, but I can sure pinpoint examples of it. For instance, years ago, when I finally gave in and signed up for cell phone service, I did a lot of shopping around for the right wireless plan. When I found the one that offered the best terms, I signed a two-year contract with the provider and joined the rest of society as a regular cell phone user.
When that first contract came up, I should have shopped around again, but instead I just re-signed for another two years with the same provider. Only afterward did I learn that I could have saved a lot of money and upgraded my plan to include the newest features. I'd been smart in my decision-making the first time, but had gotten a little too comfortable with my choice.
The same thing can be said for the two times I used payday loans. The first time I used one of these loans, which are also called deferred deposit check loans and cash advance loans, it was probably the right decision. My car broke down over a holiday weekend, and relatives who would have been willing to lend me the money for repairs were out of town. At the time, I had no credit cards, because I had just restructured my debt payment strategy and had destroyed my "plastic money." I was traveling a lot for my job and needed the repairs as soon as possible. I didn't have much credit, but I knew that payday loan services don't often pull credit or use it as a factor to approve a loan.
I did as much shopping around for the payday loan as I had time for. I found the service that charged the lowest financing
fee and made out a post-dated check to them for the amount of the repairs plus the financing fee. They gave me the cash to cover my repairs and agreed to hold my check until the date printed on it. Two weeks later, after my next payday, the check was deposited and the full amount for which I'd made it out, including the cash I'd borrowed and the fee amount, was deducted from my checking account.
Because the service had explained all my options, I knew I'd had the option to return before they deposited the check and make out a new check to extend the loan for another two weeks. However, because I had only needed the cash for the repairs and because my paycheck was more than enough to cover the amount of the check I'd made out, I had no desire to pay the additional fee associated with extending the term of the loan.
My second payday loan was a mistake from the beginning. It had been a few years since I had used my first payday loan. This time my car needed extensive repairs, and I was reminded of how I'd last paid for car repairs. I was well on my way to rebuilding my credit and didn't want to charge a large amount to my card. While I could have asked relatives to lend me the cash I
needed, it would have been embarrassing because they all knew I was working to become debt-free.
So, again, I turned to a payday loan. The financing fee was much larger this time since I was borrowing more, and, unlike my first experience, I was unsure about my ability to pay back the loan with my next paycheck. I stretched the term of the payday loan out by paying additional fees which increased substantially each time I extended the loan. It took me three months to pay off the loan, and when I added it up, I'd paid more than half again in finance fees what the repairs had cost me in the first place. I could have paid so much less interest if only I'd used a credit card, and none at all if I'd been willing to ask my family for a little help.
I don't fault myself for taking advantage of the payday loan service the first time. In fact, I believe it was the best decision I could have made under those specific circumstances. I just wish I'd been wiser about my choice to use the service the second time around. My cell phone contract comes up in a few weeks, and I think I'm going to begin shopping around for plans and pricing now. It's never too early to start working on a New Year's resolution.
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