Other than the sky high interest, the No. 1 drawback of payday loans is that many people who tap the fast cash loans market dig themselves deeper and deeper into a financial hole from which there may be no easy escape. By their very definition, people taking out payday loans are not even making it living paycheck to paycheck. When their loan comes due, very often they do not have the money to make good on the debt. When that happens, the payday lender allows the borrower to extend the loan—for an additional fee, of course—until the next payday. Payday lenders don't care if this goes on indefinitely. It's how they bring home the bacon. For the borrower, unfortunately, it is a cycle that only compounds their financial predicament.
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|Jennifer Mathes, Ph.D.|