As some of you might know, I started a website several weeks ago about short-term loans. It has a little content — but not much. My goal for the website is to rank on the first page of Google for “short term loans” and to knock one of the “get a loan” websites off the first page.
No, I am not giving out payday loans. I discourage others to get one of the blood sucking “loans.”
To be blunt, short-term loans generally suck. They come in three basic forms: payday loans, student loans and business loans. They’re a popular business model among those with a little cash and no conscience. They are usually high interest, and must be paid back within a few weeks, month or a year.
The goal of a short-term payday loan is for the lender to get a quick return, so that they might quickly lend the money back to another individual or company. But, because the loan is usually of a smaller amount, the actual interest charged is extreme.
For example, getting a $100 loan that must be paid within a month might “cost” a $115. It doesn’t sound too bad — but that’s an APR of well over a %100. That’s why there are so many payday loan companies — it doesn’t take much to literally double their money every single year.
The worst aspect of short-term loans, especially those also known as “payday” loans, is the hefty fine for a missed payment. An essential part of the short-term loan business model for the lenders is to give you a loan you don’t need and can’t repay so they can fine you for the missed payment. This puts you in a state of perpetually paying off a $100, meaning the lender is basically printing money.
That said, the only — only — times a short-term loan might be financially justified:
- Emergency. There is an emergency that literally can’t wait (food, shelter, etc).
- Investment. The loan will allow for a major business investment, with as little risk as possible.
- Repayment. The money for the loan can be repaid. Even if it requires selling something of emotional value, it’s essential to be able to repay the loan. Otherwise it’s financial suicide.
Of course, there is almost always an alterantive towards the loans. If you have an alternative, just take it. Chances are, it can’t be worse. You can read more at the website, or better yet, just take payday short-term loans “off the table” and pretend they never existed.