Cash Advance Madness!

[bjl584]

I know that the subject of cash advance establishments came up recently, and the other day at work the issue came up.

A gentleman that works here came in last Friday to get his pay stub. He has direct deposit, so we all wondered why he needed the stub. He lives over 20 miles away, so it's a fairly far distance to drive for a stub. he explains that he needed it for proof of a paycheck for the cash advance service that he uses. He uses 3 different cash advance companies and juggles money and loans between the 3. He is an otherwise fairly smart individual, but obviously he knows nothing about managing money. He is definitely caught up in a mess that I don't see any way out of. He is basically working for next to nothing. A large portion of his paycheck does nothing but pay interest charges. It's a shame, but it shows you that anyone can be caught up in something like this.

[disneysteve]

That's really the problem. Once somebody starts doing this, it is very difficult to stop because the 400% interest rate. If you pay $150 to borrow $500, as soon as you repay that loan, you're $150 in the hole again and have to borrow more money to cover that. It instantly becomes a never-ending cycle.

[bjl584]

The only positive is that some of these establishments sell merchandise much like a pawn shop. Of course you can get a loan to buy it at a crazy interest rate, but if you have the cash you can buy it outright, and there are some decent deals to be had on household items, tools, and electronics.

[Petunia 100]

I know that the subject of cash advance establishments came up recently, and the other day at work the issue came up.

A gentleman that works here came in last Friday to get his pay stub. He has direct deposit, so we all wondered why he needed the stub. He lives over 20 miles away, so it's a fairly far distance to drive for a stub. he explains that he needed it for proof of a paycheck for the cash advance service that he uses. He uses 3 different cash advance companies and juggles money and loans between the 3. He is an otherwise fairly smart individual, but obviously he knows nothing about managing money. He is definitely caught up in a mess that I don't see any way out of. He is basically working for next to nothing. A large portion of his paycheck does nothing but pay interest charges. It's a shame, but it shows you that anyone can be caught up in something like this.

Is his credit so bad that he can't take a cash advance on a credit card? Does he have anything he can sell? How about a part-time job for awhile to get out from under the payday lender?

It is a shame, it is a sad thing to see anyone caught in this trap. In my view, you do what you have to do to preserve your credit rating, even if money is tight. As a last resort, take a cash advance in order to make your minimum payments. It is not a solution, but it is so much better than getting stuck on the payday loan treadmill.

[dczech09]

Payday loans, cash advance, title pawning, and other predatory lending programs are the "hard drugs" of the financial world.

I believe the old saying is that no one trys meth just one time; the same could be said about these types of services. Someone will say they will do it once and the next thing they know, they are trapped in a web.

Getting in is much easier than getting out.

[bjl584]

Is his credit so bad that he can't take a cash advance on a credit card? Does he have anything he can sell? How about a part-time job for awhile to get out from under the payday lender?

It is a shame, it is a sad thing to see anyone caught in this trap. In my view, you do what you have to do to preserve your credit rating, even if money is tight. As a last resort, take a cash advance in order to make your minimum payments. It is not a solution, but it is so much better than getting stuck on the payday loan treadmill.

I don't know him that well to answer those questions. I do know that about 4 years ago he had heart bypass surgery, and he didn't have health insurance. He was hit with a bill for over $25,000, and he didn't pay it. I can only imagine his credit is trashed.

[ella101]

No to ca$h advance

I really don't agree with cash advance/loans. You'll certainly get a benefit from it for emergency purpose for once. Though, if you always do that all the time, it's becoming a habit. I really don't agree to this kind of practice, as much as possible we should learn to eliminate credits.
I know somebody who has a similar issue on managing her finances because she started to get loans learn to do cash advance. However, she is just spending it for her luxury and I can't see a good point on doing that. I gave her an advice as a friend to avoid it but she still keeps on doing that. Now, she is still working in a company for four years and she can't quit anytime because she is still paying for her loans. I know that somehow she wanna get out of the job but she doesn't have any choice. If ever she'll resign, I am afraid that she'll have no savings as a back up for her future.