Payday Loans

Yesterday, for the first time in my life, I took out a Pay Day Loan. I borrowed $150. I will pay it back early next month, on either the 3rd or 4th. The fee I am being charged is $26.25.

I got my loan through Advance America. Their website says this is an APR of 456.25%, but their calculation assumes you keep the money for 14 days.

I expect to keep it for 8 or 9 days. According to this Pay Day Loan Interest Calculator, at 8 days, my interest rate comes out to 798.44% and at 9 days it comes out to 709.72%.

Sites like this one: Monthly interest calculator: the payday loan trap will tell you at length that Pay Day Loans are evil and no one should ever take on one.

If you have a fixed income and are always short, do not take out a Pay Day Loan. This is a doomsday scenario. That is not what I did.

I have already earned about $163, but it isn't in my pocket yet. For me, this is a cash flow issue. I was potentially facing 4 to 6 days with little to nothing to eat. Because I have already earned the money and I am just waiting to get paid and because of my special dietary needs (and other factors), I decided paying the fee would be better than going to a food pantry.

Today, a client loaded me up with enough work cover much of the loan, work I would not have any hope of doing had I not gotten money yesterday so I can keep eating. The loan is looking well worth it to me.

I would not have done this had I not already earned enough to cover the loan. Please do not do this if you really cannot afford to cover the interest. It can amount to just digging your hole deeper and being even more in trouble next month. That is not at all what I did. For me, this was purely to address a cash flow issue. I am feeling good about having done it.

If you do find yourself chronically short every month, instead of taking out a loan, you need to seek to find additional resources that you will not have to pay back. In that situation, please look for a food pantry or some other kind of relief program (food stamps, meal sites, etc).