Payroll Stub – Stay Away From those Tax and Payroll Stub Loans at All Costs
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When the New Year rolls around there is nothing better than finding out that you are going to be getting a nice fat refund from the IRS. Unless it is being able to get a loan from the tax preparer against the refund you have coming. Many of the different tax preparation companies now offer this service, however much like the newest payroll stub loans they come at a very high price.
These loans are becoming very popular especially among those who are in the lower income bracket as it allows them to enjoy their money without having to wait for the IRS to process their paperwork and get their refund check sent out. While these loans are all perfectly legal, you might want to think twice before taking one out as the fees and interest rates might make waiting for the IRS to send you your refund look a lot more appealing.
Payroll stub or payday loans have become increasingly popular as more people are struggling to make ends meet. These loans were given this name because the lender will look at only one thing before making the loan and that is your pay stub. He will use the net pay shown on your stub to calculate how much you will be able to pay back within the allotted time. Like tax refund loans you are going to end up paying unbelievably high interest rates that may be enough to scare all but the most desperate of people away.
One of the biggest reasons that a payroll stub loan is so expensive is that it is a very short term loan. This means that the lender does not have very long to make money on the loan like a bank does on a mortgage. With this in mind they raise the fees and interest as high as possible. In most states there is little to no regulation on companies that offer payroll stub loans, leaving it up to the lender how much they will charge and the borrower as to how much they are willing to pay for a short term loan.
This is not to say that the lenders do not have the right to make money with their loans, as they most certainly do. The decision is ultimately yours as to whether you want to pay the exorbitant interest rates. The one thing to remember is that it pays to borrow money in this fashion with both eyes open so that you know what you are getting yourself into.