Not all loans are equal. Sure, they might all give you access to money when you need it most, but at the end of the day, you have to be careful when it comes to borrowing money. Not all loans are the same or beneficial for you as an individual, these three are loans to stay away from.
3 Loans to Stay Away From
While I’m no financial expert myself, I can tell you that there are a number of different loans that I will avoid at all costs. Here my top picks:
There is absolutely nothing good about payday loans. If you’re looking to avoid a dangerous financial situation, these should be first on your list. I simply cannot stress how important it is to avoid these.
Payday loans can be financially devastating in a lot of cases. The only benefit is that you can get your money immediately, but it’s all downhill from there.
Their exorbitantly high-interest rates are typically hidden as “fees” and, at the end of the day, you could end up paying 200 to 500% of the original loan price. Many payday loan users end up getting payday loans to pay off their payday loans and the cycle is endless.
Cash Advance Loan
While you might not think of this as a traditional loan, the money that you take from your credit card in cash is considered a cash advance loan. These are definitely loans to stay away from.
Typically, you’ll take a cash advance from your credit card simply because whomever you’re dealing with prefers to work in cash. It seems like a simple solution, simply get some cash out a machine and move on… but it’s anything but that.
If you thought your credit card interest rates were bad, you should see what kind of rates a cash advance has. It’ll blow your mind. It’s best to take cash out from a cash account (like one attached to your debit card) and call it a day.
The Pawn Shop Loan
Don’t do it. Just don’t. If you’re looking for loans to stay away from, then let me introduce you to the pawnshop loan.
As indicated by the title, you get these through your local pawn shop. You bring something of value in like a piece of jewelry and the pawnshop gives you cash in return. You have a set time to pay back that cash, or you’ll end up losing your personal item.
What most people don’t realize is that you don’t simply give the money back and get your item. There are interest and fees associated with it. Many people take out these loans and are unable to pay back the principal plus the interest and fees and end up losing their goods. Not cool.
Getting Money Quickly
There are some pretty nasty loans to stay away from out there, but if you need a little hand in a pinch there are also a ton of great options. Check-in with a financial professional or your bank if you need help and they can assist you in finding a good way to obtain money.
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