They say life is what happens when you’re busy making other plans. Sometimes an expected expense, like a medical bill or an emergency car repair can throw everything into turmoil. Having to come up with a sum of money quickly may not be possible, especially if payday is still a few days off, or your budget just cannot take the hit. What’s a person to do?

Payday loans can seem like an enticing solution to hold you over. There are commercials everywhere that say “get the money in your bank account today!” You’ve probably seen them in major cities like Hamilton and Toronto. In theory, they sound like a  great idea–you get a small amount of money to help cover your expense and then pay the loan back on payday, with a small amount of interest. However, these loans often result in further financial hardship for the bearer.

Payday Loans Explained

Payday loans are a type of short-term loan taken out by only the most desperate people, who quite often have nowhere else to turn. These unsecured loans are usually under $500, with an astronomically high interest rate (sometimes as high as 400%!), and get paid back when the borrower receives their next paycheck. The loan period is anywhere from 15-31 days.

These loans have become a lifeline for some cash-strapped Americans, using them to get by when necessary. Average borrowers take out an average of 8 loans each year, paying back hundreds of dollars in interest each time. They are easy to get, requiring no collateral and no credit check. Borrowers can apply online and have their cash within a few hours.

Payday loans must be paid back in full–borrowers cannot make payments like they can with traditional loans.borrowers can find themselves needing another payday loan to over their original one, getting trapped in an endless cycle of payday lending. While these are highly regulated, many payday lenders prey on the vulnerable, and are considered predatory lenders. Because of this, payday loans are illegal in some states (Connecticut, Maryland, Massachusetts, Pennsylvania, Vermont, West Virginia, and the District of Columbia).

You Have Alternatives

Because these loans are so easy to get, they can be attractive to borrowers. Payday lenders will often use scare tactics to make it seem like borrowers have no other options, but that is not the case. It is possible to get a loan even with bad credit. Shop around and compare rates before taking out any loans.

If you cannot get a loan on your own, you may be able to get one using a cosigner, or you can take out a secured loan using some sort of collateral, like your car, for example. Secured loans that use your home or property as collateral are also known as hard money loans.

As a last resort, you could use credit cards, take a cash advance or borrow money from a friend. Payday loans have a bad reputation, and for good reasons. Avoid these types of loans altogether to save yourself aggravation and further financial woes.