If you are in a pinch you may be tempted by all of the instant cash now loan ads you see on both television and the internet. Instant cash now loans promise instant relief for financial problems, but is there a hidden cost involved? We are bombarded these days by ads promising “Instant cash now,” or, “cash for your car now!”.
These lenders love the word “now”. It is used as a trigger word to get you to make the call and fill out that application without even thinking about it. It is a call to action, and a call to action that you could come to regret. Honest lenders do not need to resort to copy writing and the use of trigger words to get you to file for a loan. These lenders do understand however that there are times when people are in a pinch and need money quickly, for car repairs, vet bills, medical bills or other emergencies. These lenders prey upon the need to quickly cover that expense.
So what is so bad about these lenders then? The downside is the insanely high APR rate that these lenders charge. On average their Annual Percentage Rates exceed 400 percent, which is about 20 times higher than any credit card. If you borrow just $1000 at 400% interest, that is an extra $4000 you would pay if the loan terms are one year. So that $1000 you borrow will cost you $5000 in repayment, which is a staggering profit margin for the lender. That is $4000 of your hard earned money going towards a lender that is preying upon your time of need, and your willingness to accept the loan.
These lenders like to hide the true nature of these loans by calling them short term loans. They never come right out and tell you what the true cost of the loan is, they hide that behind percentages, which you need to do the math to discover their true cost. They will tell you not to worry about that 400% interest since its a short term loan and tell you that you could repay that loan in mere months. Yet lets be honest, people run into money trouble often, and it can be hard for many people to quickly repay that kind of money, so the loan keeps rolling over, resulting in more interest and more debt piling up.
Lets say you take out the $1000 loan for two weeks. That is a finance charge of $166. Now lets say you cannot repay that loan back in two weeks, so now the debt climbs another $166. These lenders are counting on you doing just that. If you need a loan, there are much better lenders out there to choose from. Take your time looking for a loan, even during an emergency, or you may be trading one problem for another. Our website features some of the best personal loan lenders, with honest reviews, listing both the pros and cons of each. Make the effort to know what you are signing up for, before choosing any loan or financial product. Also please stay away from payday loan lenders and car title lenders, or you could end up with a worse problem than what you borrowed the money for.