With all of today’s bills piling up and the economy just coming out of the pits, more and more people are desperate. They’re desperate to pay their mortgage, car payments, tuition and daycare. Desperate people need money immediately and are just desperate enough to take a bad credit payday loan. They take these payday loans because they cannot take an emergency loan or put it on a credit card.

A payday loan is when a company gives you an advance on your paycheck for a fee. The charges are incredibly high and they often develop into a snowball effect. The snowball effect happens when one payday loan is taken out and then, unable to pay it the following payday the interest accumulates again. Pretty soon the amount owed is more than just one paycheck, it’s two or three. Sometimes these payday loans with bad credit borrowers are very predatory. They prey on the desperation of men and women who are about to lose their house or car.

Taking out a payday loan isn’t at all like a credit card, although some people might try to make the comparison. A credit card has an annual percentage rate. That means the total percentage over a period of 12 months is about 15-25%. By comparison, a payday loan is a straight 15%-30% fee and is calculated at an annual percentage rate of about 400% to 800%. If you can’t imagine getting a credit card at 500% interest rate, it’s time to think about other options. But the interest rate isn’t the only problem with a payday loan.

Payday loans with bad credit aren’t a problem to get because usually no credit check is needed. The insane fees associated with the loan are enough to bankrupt anyone who isn’t able to pay off the loan in the period. These payday loans with bad credit borrowers are most often targeted towards low income people. The people who often don’t have the means to get a regular loan and are so far behind in payments they find it impossible to make ends meet weekly. It may seem like a good idea to take the payday loan at the time the money is needed, because they aren’t offered with much choice.

Many people don’t understand that lower income people don’t have an option with emergency funds. Because they have bad credit, they don’t have the resources to tap during an emergency. They don’t have credit cards, equity loans or even other family members that can help. The lenders prey on these people just for those reasons. They’re easy targets because they can’t afford not to get the payday loan.

What many people don’t understand is there are options. Not all of them are attractive options, but they are options.

  • Rebuilding credit doesn’t help in an emergency situation, but it will help at a later date. If you need to take an emergency payday loan, plan on rebuilding your credit as soon as possible. Then you have a credit card in emergencies.
  • Pawn brokers are another option of emergency cash. It’s better to lose a TV than a bank account because of the overdraft fees; or the accumulation of hundreds of dollars in fees.
  • There are places that pay for day labor. A simple way to make extra money is to work a day shift or a night shift.

Just about any other option is better than getting a loan which charges up to 800% interest. If you find yourself in the situation of needing emergency cash, go for the safer options first.

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