With foreclosures at historically high rates across the country, some homeowners feel that they have no other option to save their home other than taking out more loans. Some end up taking out payday advance loans, which is almost universally a bad idea for people facing a financial hardship or foreclosure. A growing use of these loans will delay any recovery in the economy, rather than stimulate growth.
Once homeowners take out a payday loan to make the mortgage, they can quickly fall into a cycle of not having enough money to pay back one or the other, and then not having enough money to pay back either loan. Even if the loan is only a few hundred dollars, interest rates can be several hundred percent, and the term of the loan is usually very short. Homeowners may not want to put themselves in a position where they only have two weeks to pay repay a loan with an annual 800% interest cost.
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