by Tiara Williams
We have all experienced days when we are strapped for cash and an extra $100-300 would seemingly make all of our problems go away. Opting not to to ask family and friends for the financial bail out, we turn to other solutions, like advance pay day loan companies.
Though pay day loans are marketed as a temporary fix, a cycle is developed where borrowers are given just enough to get by, but not enough to cover all costs. This creates a dangerous cycle of dependency, which is great for loan companies but unfortunate for borrowers, especially in low income households. Because, likely the concern is getting by, and less about APR rates and fine print on the loans.
According to a study from the Safe Small-Dollar Loans Research Project at the Pew Charitable Trusts, Twelve percent of African-Americans have taken out payday loans, more than twice the figure for whites (4 percent), and twice the figure for Hispanics and other races or ethnicities (both at 6 percent).
In recent news, it’s been reported that black communities, more specifically black teens, across the country are being critically affected by the labor market. They are struggling to find employment in cities like Chicago, DC, and New York where the crime rates are high and the probability for employment is low. Several million African Americans have been turning to pay-day loans as a quick resolve to low income issues. With high unemployment rates, unpredictable daily crises, and vulnerable desperate people, the pay day loan industry has grown into a billion dollar industry.
The average payout is $375, with an average cost of of $55 on each loan. Borrowers can take out as many as eight loans per year, spending approximately $520 on interest, with each loan lasting about 18 days before additional fees are added.
There is no quick fix for our economic woes, but certainly pay day loans are not the answer. Here are three quick alternatives to consider before getting your next pay day loan.
1. Ask Your Employer for an pay day advance.
Remember the saying, you never know until you ask, well asking may get you the extra cash that you need. These days, employers have financial perks and advance options. Don’t discard asking a family member or friend for the money, you never know who may have an emergency stash lying around.
2. Clean out your closet.
Sometimes, we have money sitting in our closets. In most cases, we have clothes, shoes or collectibles that we have never worn or used. Consider selling items on ebay, craigslist, or amazon.
3. Find a random gig.
There are online communities like craigslist, ebay classifieds, Oodle, U-exchange where people are constantly looking to employee others to do random gigs or jobs for them. If you can paint, help the elderly, instruct a yoga class or sew this may be an option for you.