Are Payday Loans Ever a Good Idea?

In desperate times, it might be tempting to visit a payday lender, but beware! These loans are engineered to keep you trapped in debt for years!

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[OscarSotoJr]

While the short answer is “No”, I’m glad they go over the numbers and figures about the situation with PayDay Loans. I’ve seen many videos about them, but I think a reminder to the public at large (or an audience that may not know) is always a good idea.

[catherinebaldwin]

My financial professor worked at a payday load office as the only thing available for a job after school. He said it like burning in hell. He’s now educating people both in the university and at his own office about the dangers, and still fighting to stop them entirely.

[hopelesslydull]

I got into finance from a desire to help people but nobody would hire me but a payday loan company. It was torture. People on fixed income refinancing every month, people who I knew wouldn't pay us back and it'd be worse for them. We did underwriting and had a lot of angry people because of it, but there are plenty of people who *technically* can pay back loans but really shouldn't.

The only situation I can see payday loans being "good" are if you are paid well, have no safety net of savings and have an emergency where you dont have the money right now and you desperately need it. Even then, the solution is to have an emergency fund you build before the emergency happens.

Remember, a penny saved is a penny earned post tax.

[rustyshackleford]

No. They are predatory loans. I remember learning about these. The interest rates are insane.

[chocolatechick]

Pay day loans are loops that are hard to get out of. I was stuck in one for a while. Until one day I had enough and told myself I have to get better with my money. 2 cents "Dumb with money" video was the first video I saw and then i watched all the 2 cents videos and realized I had to budget in order to get out of the pay day loan trap. I then applied Dave Ramsey's baby steps and now I always have money and have not gone back to a pay day loan place. 💰

[impralx]

5:20
if you are the borrower it is always better borrow from friends and families.. but if you are the lender, be careful of lending to friends and especially to family.. cause there is this mind set from borrowers, that "since you borrow from close relative, they will be no fees, no tax, no interest and even it is ok to miss a couple of times when the deadline hit"
and the reverse is also true.. it is much, much harder to collect from families..

[magicman]

I literally found this channel a few months ago because I wanted to become more financially intelligent after creating a massive debt due to payday loans.

[vanivanov]

Unfortunately, many still need to resort to these.... It's not a choice, it's deciding to survive another week so your children don't starve on the street.

[zh]

Thank for this information. Starting to put together an emergency fund, even if you can only put away a few dollars every pay cheque, is really necessary for financial stability - it's a common piece of advice for a reason.

[Snittyguy]

I miss the moustache

I worked at one of these places for like 2 weeks. It was terrible. I quit. Watching people in desperation. These places saying they were helping but only making it worse. Helping poor to be poorer. Employees laughing at and making fun of people when they walked out the door.

[yankeefederer]

Please cover buy-now pay later trends. A huge financial literacy issue

[BoldFollower]

I feel like its so easy to just say "live below your means and have an emergency fund" if you are young and single, but not you have a family. I used to be so judgmental to people who got these loans. I never had one ounce of debt when I was single... no loans, no credit cards, I paid for my cars in cash and always had stacks in the bank. I was fine to sleep on a couch, not go to the doctor or not eat to save money, not even because I had to, but because I wanted to. Once you have a spouse and children, it's so much more complicated and often inappropriate to do some of those things for any extended period of time. Literally 100% of the time I got raises for the past 3 years, it simply matches our increased expenses. I agree, ideally you live that way, but that's just not reality for most growing families, and many people do not have help of parents or a close community. I can totally see why these loans are so attractive and often... one of the only options. I still refuse to get one, but I do not look down on those who do, because, life is hard and answers are not black and white. It just sucks that these companies prey on people in their most vulnerable states. If you want to help, lower the dang interest or extend the payment period. You KNOW the type of people who get these probably have no other option, it stinks they are being taken advantage of. So sad.

[vicgamesvt]

Honestly the government should cap pay day loans at 60% APR, if this causes many of these places to go bankrupt than maybe this isn't a business that should exist.

[笑笑-sj]

The short answer? No
The long answer? NoOOooooOoOoOoooo....

Jokes aside, great video. I love how you dive into the details.

[SamSung-jvjm]

I was basically in the scenario given in this video. I didn't have covid but I had the flu all of last week. Therefore, Im only getting half my usual paycheck tomorrow. Luckily, I had been trying to start an emergency fund for the past few months. It wasnt a full 3-6month emergency fund yet but it was enough to cover for the lack of funds this time. I am able to pay my credit card bills and my part 1- rent payment for December. My motivation for obtaining a full 3 month emergency fund is definitely higher than it was before.

[DejaVieu]

When I was younger and first going to college, my family and I had to immediately move out of our place. Of course, I'm helping to pay bills but only worked part-time and this unexpected move and the fees associated with it, left me in a bind.

My cousin suggested getting a payday loan and out of desperation, (and ignorance), I went for it. Took another 2 rounds of payday loans, lowering the amount borrowed each time, to get me out of it.

I remember after paying it off the last round: I had $20 to my name the week leading to payday and it was tempting but I was like, heck no! It's one of the sweetest feelings getting out from under that cycle.

Funny enough, when I first went in to get the loan, the lady there was kind of attitude-y and borderline treated me like trash. After a year or so of paying it off, I got a call from her, all friendly, reminding me that if I ever needed money, they had funds available. 🤨 Nah, lady. Even if I did, I wouldn't be going back to you.

[Antonio_Ortiz]

When I was younger, I sadly didn't have a choice. Now that I'm in a much better situation, I can look back on it with a hard-earned truth: if you don't have strong enough finances to have good credit (and cards), you likely don't have strong enough finances to pay back a payday loan *on top* of your other regular expenses.

And this may be common sense but I can't stress this enough: If you have good credit but can't afford to pay back your cards *on top* of your other regular expenses, you are in the exact same boat, just in a higher tax bracket.

[hinkhall]

This is marginally better than borrowing from a loan shark and having them break your kneecaps when you don’t pay.

[Greendaydude]

My parents have had to go to multiple payday loan places in a week before...since bills were constant and work was not....definitely not a good idea...exactly what you described in this video is what happened...when we couldn't pay 2-3 back on time...they referred them to collections after a bit...such a pain...and interest rates are insane!! 🤯

[theamazingTRK]

I loved the way she said " oh crisis avoided " and then he respond " or has it just begun " 😂