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 they're 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 time
Your money can be deposited into your account, ready for use usually within 24 hours.
- No restrictions on use
Unlike 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 required
Do 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 process
If 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...they're 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) and Consumer Affairs to see what people are saying. If you can't find any information about them, skip to the next company. They're 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!)
The worst disability in life is a bad attitude. – SupaNova Slom
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 and Online Hair Affair 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, you can get rid of any unwanted furniture or other higher priced items on the same day!
Are your CDs and DVDs collecting dust? There are plenty of people that'll buy them from you. The Amazon Trade-In Program and Second Spin 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 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 they're leaving to Costa Rica next week and would love knowing their beloved dog is in good hands!
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.
Earn Quick Cash Online
They're many ways to earn fast money online but they're even more ways to lose it just as quickly! Here are several surefire ways to make a few bucks...
- Take Surveys
They're a lot of scams when it comes to taking surveys online for quick money. A couple of the more reputable programs to check out include Panda Research and Cash Crate. For more details, read this post.
- 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 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 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 and Amazon Mechanical Turk.
FROM A "QUICK FIX" TO A SUSTAINABLE INCOME
Whether it's a payday loan or any of the alternate methods listed above to make quick money, ultimately all the examples cited are merely band-aids to a much bigger and pervasive problem.
If you want to avoid finding yourself in continual financial dire straits, you need a reliable source of regular income to supplement your disability benefits month in and month out.
With some time and effort, I can offer you a real solution that will provide you with residual income that will stop the mad scramble to find a few extra hundred dollars to pay your bills every month.
As someone on disability, I've been able to avoid these common pitfalls by building a sustainable side income where I'm not dependent on anyone and only work when I'm physically and mentally able to.
You can learn all about it here!
In short, think about how to get out of payday loans, not fall for one!
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!