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Do Payday Loans Deserve A Bad Rap?
By: Beth Pardue
We’ve all heard the stories about cash advance lenders charging their customers
excessive interest fees. It is true that most payday loans have the highest
interest rates compared to any other type of loan. As unfair as this may sound,
payday loans do serve a purpose and there are many people who use them to their
advantage.
The majority of people who need the assistance of a payday loan have poor credit
and cannot obtain a loan by going through the traditional routes. Banks, credit
unions and other lending institutions require for their customers to have a
credit score of a certain level that a lot of people just simply do not have.
Cash advance lenders have reasons to justify the high interest rates that they
charge. Where else can you go and receive cash on the spot? Lending cash to
people with questionable credit is a big risk to the lender. They have to make
up for this risk and for having a large amount of cash on sight by charging
higher interest rates on their loans.
Critics of the payday loan say that the short terms of the loan and the high
interest fees can cause people to become trapped in a never ending cycle of
payday loans. In some circumstances this case may be true. It can turn into a
bad situation when people take out a cash advance loan that they know they
cannot payback in addition to leaving enough money left over for other bills and
living expenses with their next paycheck. In this situation, the person who is
in need of a cash advance is better off to ask a friend or a relative for a loan
who will not charge them interest and will be more lenient on the payback terms.
In response to the allegations that the problem with payday loans lies with the
lender instead of the borrower, cash advance loans are not meant to be a
permanent solution to cash flow problems. They are intended to be used only for
unexpected expenses and in the case of an emergency.
If someone finds themselves on the payday loan merry-go-round, they more than
likely need to step back and asses their budget. If they do not have a budget,
that itself may be a large part of the problem. If someone cannot afford to pay
all of their bills and necessities after cutting out all unnecessary expenses
and going on a budget, they may want to seek higher paying employment or look
into debt management solutions.
Even if you have good credit, there are benefits to using a payday loan. The
limit on a cash advance loan tends to be much lower than the limit for a
traditional loan. Many circumstances call for the borrower to only need $500 -
$1,000. They can easily obtain the money through a cash advance without the
hassle of an application, a credit check and waiting for approval. Many online
websites such as http://www.easy-approval-personal-loans.com offer both personal
loans and payday loans so you can easily find the loan that best suits your
needs.
In conclusion, only you can decide if a payday loan is the best option best for
your situation. There are pros and cons to every situation. By being responsible
with your finances and educating yourself on all of the possible loan options
available to you, you will have the best chance of coming out on top.
About the Author:
This article was written by Beth Pardue who has over 10 years of experience in
the financial industry assisting clients with assorted financial needs. To learn
more about your personal loan options please visit:
http://www.easy-approval-personal-loans.com
Note: This article may be freely reproduced as long as the authors bio paragraph
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