Why Payday Loans For People On Disability May Be Dangerous
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So you’re receiving disability benefits but you’re falling behind on your bills — a pretty common scenario among those of us on disability. You’re in a tight bind and looking for quick way to get some cash to carry you through until the end of the month and payday loans for people on disability sounds like a good idea.
To be blunt…it’s not.
In fact, payday loans are best avoided and I spell out why in this article. You’ll also learn how payday loans work and why there are enticing, as well as an explanation of safer ways to make quick money that won’t land you in trouble.
WHAT ARE PAYDAY LOANS?
Payday loans are short-term loans primarily used for cash emergencies starting from $100 going up to about $1000 with a duration of about 14-30 days.
Unlike other types of loans, a borrower’s credit score doesn’t typically factor into the lender’s decision-making which is great for those with bad credit.
For most lenders, only a few basic requirements need to be met…
- Proof of regular income (disability benefits amounting to at least $800 per month would qualify)
- A checking and/or savings account currently in use
- A U.S. citizen or legal resident living in the U.S.
- At least 18 years old
Despite meeting these requirements, lenders may still decline your application but the chances are MUCH higher that they’ll grant you a loan than a bank ever would.
THE BENEFITS OF PAYDAY LOANS
If you look at most payday loan websites, you’ll likely see perks like these…
- No slow processing timeYour money can be deposited into your account, ready for use usually within 24 hours.
- No restrictions on useUnlike most other types of loans, a payday lender doesn’t tell you what you can and can’t use the money for. Do you need to pay off last month’s intravenous vitamin C drip sessions? No problem. Do you want to use it to buy yourself a Takamine acoustic guitar? Knock yourself out.
- No documentation requiredDo you remember when you had to provide a copy of your original birth certificate, W2 forms, and medical records when applying for disability benefits? Well, none of that is required here. All you need to do is fill out a simple application form and provide a copy of your bank statement to get the application process rolling.
- No face-to-face application processIf you’re homebound, this really works in your favor since the entire application process can be done from the comfort of your home.
Where do I sign up, right? Well here’s the part where I burst your bubble…
THE DARK SIDE OF PAYDAY LOANS
Lately, more and more of these businesses crop up for one obvious reason…there are lucrative. Let me explain why.
Sinking Into a Vicious Cycle
As a first time borrower, a reputable lender will usually start you out at $100 to see whether you pay it off in time before granting you higher loan amounts in the future. Sounds fair, right? Problem is, many lenders don’t operate this way; they’ll grant the complete amount requested by the borrower.
The fact of the matter is that most borrowers don’t make their payments on time and so the loans get continually extended, accruing interest that can rival credit card debt (we’re talking triple digit percentages!)
Not only that but borrowers often keep borrowing money just to make payments and before long find themselves stuck in a vicious cycle. People on disability are especially prone since unexpected medical expenses often come up. Some of these may be out-of-pocket which can be very expensive and thus financially crippling.
Despite outward appearances, most of these lenders are predators. With the amount of interest piling on month after month, payday loaners are the ones that win in the end.
And as if the high-interest rates weren’t enough, many of these lenders act unscrupulously with borrowers’ private information. That’s right, some have been known to SELL private information to 3rd parties so don’t be surprised if all of a sudden you find your inbox inundated with spam.
The funny thing is that the lenders I just described are practically angels compared to this…
Scams and More Scams
Payday loans is an industry rife with scams where websites that appear professional and trustworthy are completely fraudulent and dangerous. If you’re not careful, you may find your computer infected with viruses and your banking information compromised after entering your private information. Security seals, glowing testimonials, and happy faces are easily faked and thus can’t be trusted.
DO YOUR DUE DILIGENCE
If I still haven’t convinced you to steer clear of payday loans, at least make sure to follow these steps before applying to a lender:
- Make sure to compare fees and interest rates to find the best lender for you.
- When in doubt about a company, consult the Better Business Bureau (BBB) [source] and Consumer Affairs[source] to see what people are saying. If you can’t find any information about them, skip to the next company. There are enough payday loan businesses with legitimate reviews so you don’t have to be the one to test the waters.
- ALWAYS read the fine print before signing on the dotted line (glazing over the iTunes terms-of-service is one thing but don’t do it here!)
7 ALTERNATE WAYS TO GET QUICK MONEY BESIDES PAYDAY LOANS
There are far safer ways to fast cash and I’ve spelled out a few of them below. Any one of these examples can quickly make you $300 or so. Just make sure to watch out for the “get rich quick” online schemes which I’ve written about extensively in the past.
Sell Your Hair
This idea might not immediately spring to mind but if you’re a woman (or for that matter, a man) with at least 10 inches of uncolored hair, there are companies that’ll pay you for it. Buy and Sell Hair [source] and Online Hair Affair[source] are both reputable companies to do business with. For more information, read this post.
Sell High Ticket Items on Craigslist
Got an old dresser you want to get rid of? How about a couch? If you place a local listing on Craigslist, [source] you can get rid of any unwanted furniture or other higher priced items on the same day!
Sell CDs/DVDs/Games
Are your CDs and DVDs collecting dust? There are plenty of people that’ll buy them from you. The Amazon Trade-In Program [source] and Second Spin[source] can relieve you of those old Spice Girls discs (what a relief).
Rent a Room in Your House
If you live in a house and have a room to spare, why not place a free listing on Airbnb[source] and try renting it out?
Pet Sit for Your Friends and Neighbors
Send an email or get on the phone with a nearby friend or neighbor and see if you can help them out. Who knows, perhaps there are leaving to Costa Rica next week and would love knowing their beloved dog is in good hands!
Recycle Electronics
Recycling bottles immediately comes to mind but don’t forget that old iPods, mobile phones, and other electronic devices can be traded in for money too with companies like Next Worth. [source]
Earn Quick Cash Online
There are many ways to earn fast money online but there are even more ways to lose it just as quickly! Here are several surefire ways to make a few bucks…
- Take Surveys – There are a lot of scams when it comes to taking surveys online for quick money. This article can help you avoid the pitfalls.
- Become a Music Critic – Do you enjoy listening to music? Do you know what you like and like what you know? Well, Slice the Pie [source] will pay you to write music reviews and spout off your opinions.
- Critique Websites – If you like the idea of giving your thoughts about websites (e.g., design, layout, user-friendliness, etc.), User Testing[source] is looking for people like you.
- Become a Task Master – If you’re willing to do various mundane things that many people will pay for like stuffing envelopes, there are plenty of jobs waiting for you at Task Rabbit [source] and Amazon Mechanical Turk. [source]
NOW IT’S YOUR TURN!
Have you have already taken a loan from a payday lender? What was your experience like? Are you still shopping around for payday loans for disabled people? Where are you in the process? Leave your comments below!
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Stephan
I really admire your mission and the hope and help you bring to people on disability. I believe you have been put on this path and you’re providing a great service and inspiration.
I can see that you’re wanting to help people get into an online business that can help get them away from having a reliance on payday loans and other scams.
What are the minimum requirements in equipment and time for someone to be able to effectively follow this program?
And how certain are you that the program you describe will really help everyone on disability achieve the goals you discuss here?
Thanks.
Hi Michael, thanks for commenting!
There are no guarantees in business so I can’t definitively say that Wealthy Affiliate will help everyone on disability but I can say it’s a legitimate opportunity like no other.
Your work ethic and perseverance have a lot to do with how successful you’ll be at this. Then, of course, you also have to factor in the scope of your disability and how much it limits you.
As far as time, it’s hard to say since it depends on many factors including the number of hours per day you dedicate to your business. But roughly, I’d say 3-6 months until you start to see some income coming in.
As far as equipment, you really just need a desktop computer or laptop with an internet connection and you’re good to go!
This is an awesome blog post. I am definitely anti-pay day loan. I’m glad that you broke down the dark side of pay day loans. While pay day loans may appear to be a good option for people who need access to cash in a short amount of time, few people way the long term consequences of taking out a pay day loan, and particular the extortion like interest rates that they charge above and beyond the principal.
Thanks for commenting! Yep, there are definitely better options out there than payday loans.
Thanks for writing this article. I am currently on disability and have considered payday loans but I couldn’t find a lender that had a reasonable interest rate. Would you be able to recommend a few that have relatively low interest rates?
I love your list of ideas of how to make a little money on the side. I tried doing surveys but it just wasn’t worth it for the amount of work I put into it.
So that’s when I found Wealthy Affiliate and decided to take my own future in my own hands by building out a few websites centered around what I love to do.
Hi Ian, thanks for commenting! I’m glad you found my article helpful.
Unfortunately, I don’t know of any reputable payday lenders. In fact, I’m inclined to say that it’s an oxymoron! I’d stick to one or more of the alternate ways to make quick money. Also, another “task” based site I’d look into is Fiverr.com. Hope that helps!
This is such good information on pay-day loans. I’m also against it. You’re right about it being a vicious cycle. It’s best to try and get the money through some effort than borrowing it when you’re in deep financial crisis. I mean, if we’re not making enough to support ourselves, then what makes us think that we will be able to take care of the bills next month AND pay back the loan next month? That’s a very useful article.
Indeed Reyhana, indeed… 🙂
Its good that you let people know about the true nature of payday loans, and how they work against you in the long run.
I think people should be aware about the dark sides of the quick and easy loans and focus more on avoiding them altogether.
I hear more and more of these scams on a daily basis now so thanks for this post.
You’re welcome!
I am so glad that I read this post! I will start collecting disability this month and I know that I will have to do some creative budgeting. From what I read here, why are Payday loans even legal?? Triple digit interest rates are really scary. I can see where they do appeal to someone who does not have enough funds to cover the whole month though. It is too bad that these types of services exist and prey on vulnerable people. If someone on disability followed your program, they could have extra income all the time so they would not have to sign up for a Payday loan.
There are a lot of sharks at out there Erin, so long as we recognize that, we can defend ourselves. Best of luck!
I read your article about payday loans. Not only are they dangerous for people on disability, but dangerous for everyone. The fees are outrageous! When you get the load paid, you may have paid about 3x the amount. They are illegal in some states, with my state of Pennsylvania being one of them. While you get your money quick and they don’t do credit checks, they can put people in an even worse off financial situation. It’s good you’re telling people to stay away from them!
Hi Karin, indeed, payday loans can be a quick way to financial ruin, thanks for weighing in!
Stephan: Boy, powerful and great stuff. I am a disabled person and couldn’t agree with you more. The interest rate alone on those payday loans is crazy and once you are caught in their web, they got you dead to rights. And if you don’t pay it back? Watch out and you might as well close your checking or savings account which you will need for your disability checks every month.
Just don’t start, that is all I have to say, too. I’m so glad that you offered people little known ways to make some extra cash. May not be a whole lot as in the case of taking surveys but if you have nothing better to be doing which is never the case for me, you might as well answer a few surveys every day.
But even some of those are traps! Be careful to follow their rules to the T or they don’t pay out on all that hard work that you just gave them.
Thanks again for putting such a wealth of information out there for people who really do need extra bucks every month. Just do not ever, if you can really ever help it, take a payday loan.
Rene
Thanks for your insightful comment Rene 🙂
Hey there,
It is sad the way that these companies prey on the desperate attempts of people just trying to get by. I am also with you on this one. Very dangerous step to take.
I agree with you, there are better ways.
I am not sure that selling my hair would be on my list but those online jobs you suggested will be very helpful for a lot of people.
Keep up the good work. I will be sharing this
Thank you
I totally think that payday loans are a scam. If you are intentional to budget your money and plan ahead you should never touch payday loans whatsoever. The interest rates on these things are ridiculously high! Being on disability is very difficult and frustrating, but payday loans are only going to compound peoples problems.
Yup, that’s pretty much it!
I think payday loans are dangerous for anyone and I can definitely see how they could become a trap for people on fixed incomes.
I used these types of loans when I was younger, and it took me forever to get myself out of the system! My mom just started receiving disability, and she can already see that it will be a struggle. I am going to pass along your post so she can check it out!
Thanks for a great read!
Brendon
Glad to help Brendon…
I too have an invisible disability and am caught in the payday (only they call it an installment loan) trap. The BBB won’t get involved, they just said to check a company’s ratings next time. Faith based and social services in my town won’t help either. I tried a GoFundMe campaign and looked up reviews and comments about these loans on social media. There is no compassion for people who get caught up in this debt cycle.
As for surveys or online tasks, there are not worth it. It’s almost humiliating to answer question after question for only a few pennies. I’m through with them. I don’t know what my solution will be but it has definitely made my disability worse. But no one seems to care.
Wow Stephan! What an amazing article with an amazing goal! I’ve seen people go into the downward spiral because of payday loans and things like it. I think you’ve introduced some great solutions: some I’ve tried and some I’m curious to try. I’ve sold items on Craigslist and that has worked very well for me in the past. I’d like to try out Slice the Pie, User Testing, and Task Rabbit. Those sound like cool ways to make some extra cash. I wish I could pin this article so I can remember these ideas for later, but for some reason it’s saying it may lead to spam. Do you know why?
Hi Tiffany, thanks for the kind words 🙂 I’m not sure what you mean about “leading to spam” but I’ll take a look! Thanks…
Hello, I, unfortunately, have a few payday loans and it is what you say — it’s just a spiral into more debt. In most circumstances they require access to your bank account so they can get to my bank.
Once you almost pay back the loan you only end up refinancing… it’s a never-ending cycle of debt.
Yup that pretty much sums it up!