Sarah J. Llewellyn

Have you ever seen the commercials that say “HEY! DO YOU NEED MONEY? WE’LL GIVE YOU $800 RIGHT NOW, JUST AS LONG AS YOU HAVE A JOB!” These commercials are for cash advance companies and are pulling people in by the millions to loan them cash. Why do people do this? They do it for many reasons; however, there is only one reason why anyone should take a cash advance at one of these companies, and that is for an EMERGENCY only. Let’s face it, these places charge astronomical interest and people still do it. The problem I have is that customers get caught up in the extra money they’re getting and it becomes a vicious cycle. Some will never ever pay these loans back because they can’t. They will always be a paycheck behind or more and will not be able to afford to give up that money to repay the loan.

An example of how this type of loan should be used would be like this: Your electric gets shut off at home and you don’t have the money to pay them to get it turned on. So, you visit the local cash advance store and take out only enough for the bill and pay it back within 2 weeks. This is the optimal way to utilize this type of loan. You will pay $50 more than what you borrowed, but it does get you out of a bind.

An example of how NOT to use this type of loan is this: I need some extra cash for the weekend because I’m going out with the girls. Sure, I’ll take the maximum amount that you will give me and pay it back in 2 weeks. Problem #1: The loan is more than what you get paid per week and you can’t pay it back, or problem 2 would be you pay it back and take out another loan, then another , and another, and then finally you are dependent on that extra money; therefore creating the vicious cycle. What people don’t understand is that those fees associated with the loan are so high, that you’re paying a lot more back than what you borrowed.

I have seen this in person and it literally makes me sick. Companies strategically market towards lower-income people to borrow money and charge them over 50% in interest, and still people get addicted to the loans. Laws have been passed so that these companies cannot loan over a certain amount, but this doesn’t change the fact that these companies are putting people further and further into debt. But, I’m not going to put this all on cash advance companies because they have to make money too and consumers have the responsibility of taking care of their own financial issues and becoming educated on these types of loans.

Would you recommend a cash advance loan to a friend? Why or why not?

Photograph Credit:
Sabrina Segal