Payday Loans – Addictive as Drugs
Payday loans can be addictive because they’re readily available and easy to get, so people turn to them often when they need cash to tide them over during financial emergencies. Unfortunately, these loans were meant only for short-term, emergency cash needs and carry high interest rates to keep them available to everyone–even people with bad credit. These loans, which are meant to be repaid from the next paycheck, can trap people in cycles of debt and become addictive.
When financial needs arise, people can just apply for a payday loan and get their money within a short period. The simple application and approval processes can result in people ignoring their own best interests and applying for short-terms loans every time they come up a little short or want something that they can’t afford and shouldn’t buy. Payday loans–like credit cards, gambling and shopping–can certainly be addictive if borrowers aren’t careful to use the loans as intended.
What Is Addiction?
PsychologyToday.com asserts that addictive behavior is seldom related to physical tolerance or particular substances but caused by emotional stress that forces people to take certain actions at certain times. These actions might be to alter reality through drugs, overeat or spend beyond a person’s means. Addiction invariably exacerbates the problems and traps addicts in vicious cycles. That’s exactly how payday loan addiction works, but the responsibility for the behavior rests with the borrower and not the lender.
How to Use Payday Loans Responsibly
Payday loans, as in any other form of credit, require responsible use because their use can result in lower credit scores if not repaid, higher costs than anticipated, legal collection activities and even addictive behaviors. There’s one thing that’s critical to understand: Addiction is a personal problem that people develop and not an inherent problem with the objects of an addiction.
Alcohol, pain killers, casino gambling, sports betting and even some milder “street” drugs like marijuana can be used responsibly for recreation, social gatherings and treating pain. These substances and behaviors can also be misused when carried to extremes such as driving under the influence, gambling away paychecks or building mountains of debt through uncontrolled shopping.
Payday loans are available in 41 states but banned in nine, so most people can find payday loan offices nearby or apply for loans online. However, as with all forms of credit, borrowers need to understand the risks, know how much any loans will cost them and have the resources to repay their obligations. Investopedia.com recommends using payday loans responsibly but warns borrowers to consider three things before applying for loans:
- Assessing whether you really need the loan
- Determining if you can repay the loan from your next paycheck
- Avoiding multiple loans from different lenders–especially at the same time
If you can’t afford to repay your loan from your next payday and still cover living expenses, a payday loan isn’t right for you. An installment loan or other financial strategy would be a better option. Sometimes, you just have to get by as best you can. If you need money and can easily repay it, however, payday loans can be a blessing. Don’t borrow more than you need, and repay the loan as the loan terms require.
Getting out of Cycles of Debt
The underlying causes of addiction must be addressed to “cure” an addict, which really means managing the addiction. Payday loan addiction could be fueled by drugs, gambling or irresponsible spending, but in every case, controlling the underlying behavior is essential for getting out of debt. Managing debt can present its own challenges regardless of whether the debt is caused by shopping, emergency expenses, careless spending or practicing addictive behaviors.
Some credit counselors are thinly veiled predatory lenders, and the FTC.gov website warns that reputable counselors are nonprofit organizations that are usually affiliated with government agencies, universities, credit unions and housing authorities. Some nonprofit credit counseling companies charge high fees, encourage debt consolidation loans or promise to fix or repair your credit, but these are usually scams. Legitimate counselors will warn you that it’s necessary to create a budget, list all your assets and debts and work out a reasonable repayment plan.
People Become Addicted; Things Don’t Addict People
Even the hardest drugs don’t walk in the door and “addict” people; people have to be vulnerable and misuse the drugs. The same holds true for gambling, shopping and compiling excessive credit card debt. People problems cause addictions, and payday loans are certainly catalysts for addictive behaviors and can even encourage other additions such as shopping, gambling and abusing drugs or alcohol because they’re so commonly available.
Easy approvals and a simplified application process over the Internet make payday loans true risks for people who can’t or won’t borrow responsibly. Politicians never discuss banning alcohol, shopping and credit cards, but they’re quick to attack short-term lenders for encouraging addictive behaviors or taking advantage of addicts. You can learn more about the payday lending industry at Personal Money Store.