If you need money quick, make sure it doesn't make you worse off in the long run. Don't throw money away by using any of these 4 institutions.
The holidays are just around the corner. You know what that means: more traveling, gifts, family events, and so on. You can expect that and then some. Regardless of whether it’s an expected or unexpected expense, this time of year can be expensive.
If you’re unprepared, you may look to different avenues for extra money or special financing. Not all options are created equal though; make sure your temporary fix doesn’t make you worse off in the long run. You’re likely throwing money away if using any of these 4 institutions.
4 Ways to Throw Money Away
These institutions are notorious for having sky high rates and fees. Annual Percentage Rate (APR) on these loans can be as high as nearly 750%! Just read the disclosures. If you’re in a difficult position and are unable to repay, you can be caught in a vicious cycle. Most people are forced to renew the loan multiple times and may never pay it off.
You not only have to worry about the loan itself, you also have to worry about your accounts. Payday lenders will attempt to withdraw from your account until the loan is paid off. They may even cause multiple overdraft fees as a result, but that is the least of your concerns.
First and foremost, no credit needed is not the same as no credit check. Sure you have an affordable payment and have the option of paying early to waive some fees, but is it worth it?
Let’s think. A bundle allows you to buy two 32 inch televisions for $30 a week. The total at the end of nearly a two year loan is over $3,000. Great deal, right? This is if you make it to the end. If you’re unable to make payments, the item must be returned leaving you with nothing.
It’s better to save your $30 a week until you can pay the full price. Even if you decide to pay in full at the beginning, you would pay significantly more at a rent-to-own store compared to other retailers. Why overpay?
You may also consider taking your valuables to a pawn shop to use as collateral for a short-term loan. In doing so, you agree to temporarily surrender the item for a loan that’s only a small fraction of its value. There’s a chance you will be required to pay insurance costs and storage fees on top of your payment.
Here comes the risky part – if you’re unable to make payments, you may have to file for an extension or renew the loan altogether. Depending on the option, you agree to pay all or part of the interest that’s owed at that point and start over. If you stop making payments altogether, the item that was pawned is forfeited after 60 to 90 days. There are multiple ways to lose here.
Check cashing establishments.
Using an institution that charges you to have access to your money is not ideal. Depending on where you go, you may have to pay a flat fee and/or have a percentage of your check deducted. A few dollars here and there may not seem like a lot but it can add up.
If you get paid twice a month, you’d need to cash a check 24 times a year. If you pay $10 in fees each time, you’d be looking at a total of $240 spent in fees every year. I’m sure you’d agree that those funds, no matter the amount, can be put to better use.