Devil's Advocate 

Four Reasons You Should Get A Payday Loan

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This is a Devil's Advocate post.

Payday loans have been in the news a lot lately, for bad reasons, but they need not be always cast in a bad light. Payday loans have also gone by other names like check advance loan, quick cash loan, post-dated check loan, deferred-deposit check loan, etc. but ultimately it comes down to any loan where you can get cash immediately at a higher interest cost in return for that speed and flexibility. Here are some reasons why a payday loan may be right for you:

Get Cash Quickly, Now, and Only What You Need

Where can you turn to if you need a few hundred dollars right now? Your family? Your friends? In that whole group there are probably going to be very few people who can get you that kind of money right this very moment. Also, try to get a short term, small dollar amount loan from your bank. Good luck. They’ll force you through their application process, do all the necessary checks (which invariably will take forever), and by the time they approve it, if they approve it, you’ll likely be in bigger trouble than when you started.

Compare Costs, Payday Loan May Be Lower

So you have a debt that needs to be repaid, compare the cost of getting the short term loan versus the cost of missing a payment on that debt. Is it an auto note? Would you lose your car if you didn’t make the payment? Is it a mortgage payment? Would your lose your house if you didn’t make the payment? The cost of fees in a payday loan is probably lower than the cost of losing your car or your home, in which case the payday loan would make sense. Those are more extreme cases but what about if you mailed off a check and didn’t have the bank funds? Pay a little more in fees to the cash advance shop or get socked with a $45 overdraft fee?

It’s Strictly Business

It’s going to cost you some money at a payday loan store but it’ll cost you more in terms of emotional expenses if you borrow that kind of money from family and friends. With a payday loan company, it’s all business, zero emotion; when you borrow from friends and family, you tax the relationship.

No Credit Check

This is part of the reason why the application process is much shorter, no need to run your credit history and air out your dirty laundry. This also means that the loan won’t ever appear on your credit history unless you fail to pay back the loan. So the net result is that you get a loan, some short term help, and it never appears on your credit history – the best of both worlds.

Okay, Devil’s Advocate post over, I think payday loans are both inherently bad and they prey on unsuspecting customers. They’re bad in that they’re expensive, the fees for everything are exorbitant, and because they feed into the “instant gratification” phenomenon that is fueling a consumption driven country. Money now, responsibility later. Secondly, they prey on customers that are looking for a quick and dirty way out of a bad situation. Debt payment due? Snag a payday loan, no one will have to know, I can fix it next month… except they can’t fix it and then the debt snowball increases and now is rolling down the hill even faster. Do yourself a favor, don’t ever get into a situation where you’d consider a payday loan.

{ 26 comments, please add your thoughts now! }

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26 Responses to “Four Reasons You Should Get A Payday Loan”

  1. Brad says:

    This must have been the hardest Devil’s Advocate post you’ve had to write to date. There is virtually nothing out there to reasonably defend getting a payday loan.

    • jim says:

      It actually wasn’t terribly difficult to write but I definitely felt “bad” writing it because I know how much damage payday loans can do. See, if you don’t get married… well you don’t get married, no big deal. If you lease a car, so you might lose a little bit, no big deal. With a payday loans, the downside is significantly bigger. That’s why I felt a need to close the article the way I did…

  2. CK says:

    No matter what city you are in you can always tell which areas to avoid by the amount of payday loan and rent-to-own places.

    • jim says:

      Yeah, check cashing joints are definitely always in the seedier parts of town but they’re a necessity sometimes I think, not because of the loan aspect but for other reasons. Some people just don’t (or can’t) get bank accounts.

      • CK says:

        “necessity” ? Jim, please paying 400% interest is never a necessity. A few years ago these operations went by a different moniker, loan sharks.
        People need to be educated about alternatives and how to avoid getting involved with these crooks. That being said I’m actually against interest rate caps, the market should be able to work that out with education.

        • jim says:

          If you don’t have a bank account and can’t open one (for whatever reason, we’ll leave it at that), you have to rely on someone to cash it for you and give you the money – in many cases this is the payday loan place. That’s why i said it was a necessity, not the loan part.

          • CK says:

            Most grocery stores will cash things like paychecks (and usually for a fee much lower the a payday loan/check cashing place) I know Walmart will for one. I’m pretty sure most banks will as well even for non customers if you have ID, not sure of the charge though.

          • Hope says:

            In reply to CK’s post below:
            Most grocery stores wont cash a check over a certain amount. When people receive their taxes back the checks can be over 3k (depending on dependents and so forth) and even big retail chains like wal-mart wont cash them. Leaving ONLY PayDay Loan/Check Cashing companies to foot the bill.

    • Steve Austin says:

      I love those check cashing joints, not for their payday loans, but for their cheap services. In some of them, you can get dirt cheap money orders (say for 25 or 29 cents each) for those times when you want to pay cash but your vendor will not (or somehow cannot) accept cash. Or if you have to mail payment but don’t want to send cash via first class mail (not advisable for anything over $20 or so).

      I would rarely (if ever) take out a loan, let alone one at the rates given by those rapists.

  3. plonkee says:

    Actually, I think these are very credible reasons for going to a payday loan place.

    Naturally you don’t want to be in the position of having to use them, but if you need money you haven’t got right away, you’re going to have to pay for it. Its better than getting money from a loan shark who will break your knee caps if you don’t pay up. And its a lot better than contemplating theft.

  4. broknowrchlatr says:

    Wow. This Devil’s Advocate is one of the biggest stretches yet 🙂 Next, do one where you aregue that people should not work for a living.

  5. Sabrina says:

    I can understand that it’s a “Devils’ Advocate” post and that these are not the most desirable of loans, but for the reasons you so eloquently state, I think they’re a needed service, or it wouldn’t be such a booming industry. People tend to learn from their own mistakes, it’s unnecessary to judge someone based on their needs for a product or service, and that includes areas of town where you see these types of business.

    I’m sure you’ve all heard a little something about the brand new Dallas Cowboys Stadium that is being built in Arlington, TX. If you ever visit this stadium, take a look around the area, by no means is this a struggling area of DFW, but it is overrun almost with PayDay Loan and Rent To Own business.

    Everybody has to feed somebody.

  6. Tim says:

    i’m probably one of the silent minority/majority that do not see anything wrong with pay day loan joints. I do not see them preying off of anyone. The mainstream banking industry and the media have demonized pay day loan places for one reason: because they are not subject to the same restrictions as banks. Banks see them cutting in on their profits, so they’ve done exceptionally well in demonizing them. They are like any other grey market or black market institution: they operate between the regulated band to make money. This does not make them evil companies. Your major banks are the ones who prey off of people far more than pay day loan companies.

    the bottom line is, people need cash for whatever reason. we shouldn’t be judging them because of those reasons. heck regular people borrow money for worse. Regular banks may not give them loans for whatever reason, so pay day loan joints fill in the void. It really is not the fault of these joints, it is personal responsibility. If you choose to go to one, you are made well aware of the fee associated with doing so. In this light, they are much clearer than banks who bury exclusions in fine print.

    i admit it, i’ve used one when i was irresponsible with money. i can say that without it, i would have been in far greater trouble than the $25-$30 fee that the pay day loan place charged. but again, it was personal responsibility. if people were more responsible, these places wouldn’t be in business. likewise, if people were more responsible and if credit card companies didn’t offer credit so loosely to high risk people, then banks would obviously lose lots of money.

  7. Chenda says:

    I hope the below helps allot of people who might consider getting a payday loan. was introduced to me by my colleage and it’s a very interesting concept…

    How it works:

    Borrowing money through Prosper is fast and easy, and because you’re borrowing from people, the rates may be lower than you’d expect!

    1. Join Prosper – Joining is quick and easy. And free!

    2. Create your loan listing – Say how much you want to borrow, and what your maximum interest rate is.

    3. Watch the bidding – Lenders start bidding immediately—watch the funding go up and the interest rate come down!

    4. You win!
    If your terms are met, your loan will be funded directly to your bank account.

    5. Easy monthly payments
    Your monthly loan payments are withdrawn automatically from your bank account.

  8. Chris says:

    Do these payday loan places inform customers of the total cost of the loan? If they do, and its right there in writing when the customer gets the cash, I really don’t see how it is predatory. If they are playing games with fees and trying to hide what the customer is actually paying, I see the problem.

    It looks like its just an expensive way to get a quick loan, but I’ve never been in one so I don’t know what the experience is like.

  9. Weekly Roundup – 06/08/07

    Well, this is my last weekly roundup as a 35 year old — I’ll be turning 36 over the weekend. Oh well, at least I’m still in my mid-30s… As for a birthday celebration, we’re headed out of town and will be spending the weeke…

  10. Ernest says:

    A very stupid article…. headline reads “4 reasons you should get a payday loan….” The last sentence in the article, you recommend never getting this loan. Well if you recommend never getting this loan… don’t talk about it. Now there are people who never knew about this loan… that know about it, and will think about getting it !!!! Simply STUPID !!!!!

  11. realnfo says:

    I think it’s a little disingenuous to pretend you’re playing devil’s advocate with an article on payday loans, meanwhile you’re raking in google adwords bucks from the ads promoting the very thing you say you want to discourage. Shame on you.

  12. What’s the different between the payday loan and cash from a CC? If you do either it doesn’t matter, it seems the same to me.

  13. gotrippedoff says:

    I just signed up with a few days ago and I hope it works. I have to admit I was extremely stupid as I took out payday loans (since I couldn’t get a bank loan) to help my son with college and then when things started to come up I noticed I had to keep rolling over the fee and when I would pay one off I would have to take another one out to catch up with my bills. I have joined Prosper to help me get these paid off. I pay over $1100 in fees a pay period. Now tell me how stupid and how is one to get out of that. I will say it was my own fault and I just can’t believe I got into this. At the time I thought I had no other alternative to my situation and now I am finding out going to your local credit union might be able to help.

  14. mizjellybean says:

    People use payday loans out of desperation, not stupidity. I think most people figure it out after one loan that it is a bad bad deal.

    And for gotrippedoff: I don’t know your situation, but I’d suggest letting your son get his own loans. It is usually pretty easy for students to get loans in their own name and not overwhelm their parents. That’s what I did. At the time, I was not all that thrilled that money had not been put away for me, but such is life. If the money is not there, it’s better for the student to take on the debt…it is their education.

    And for Jim: I’d like to see a devil’s advocate on not saving for college education (if you have not already done so). There are many circumstances where it is not practical, especially in today’s world of ever disappearing pension funds.

  15. Cyrus Nash says:

    Reason #3 is actually pretty powerful. If you’re insecure enough, the costs and risks of these predatory loans may be worth it, if the alternative is going to your girlfriend and asking for money- that never ends well. And, depending upon how elaborately you’ve built up a facade of yourself as a savvy financier, the cost to your reputation may be more than a loan shark can hose you for.

  16. Rob Madrid says:

    There was an interesting article in one of the UK women’s magazines (sorry can’t provide a link) about how since the UK doesnt have payday lenders people are turning to loan sharking. Yes average middle joes like you and I are visiting the local pub and borrowing money. Of course if you can’t pay you get a free trip to loan sharks house. Your held until your family pays up.

  17. I think there are probably a lot of bad payday loan companies that try to take advantage of consumers, but that doesn’t necessarily make the idea of payday loans a bad thing. Payday loans provide a necessary service for people that desperately need money, and for some people, there’s nowhere else to turn. Even though they have high fees in some cases (but not necessarily in all cases, because you can find payday loans for $10 in fees per $100 borrowed, although some people would still say that is high), these fees may really outweigh the consequences for people that need gas to get to work or extra cash to feed their children. Yes, there are alternatives, but not all people have access to those alternatives if they are in a desperate financial situation. Many people say that lawyers are inherently evil, but when you’re facing the judge, they’re your best friend in the world. Thank you, love the devil’s advocate approach.

  18. Linda says:

    can payday loan business do anything to you if you don’t pay them back?

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