Do Payday Loans Deserve a Bad Rap?

Home
>
Loan
>
Do Payday Loans Deserve a Bad Rap?

Do Payday Loans Deserve a Bad Rap?

We have 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 Easy Approval Personal Loans offer both unsecured 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.

-------------------------
Note: This article may be freely reproduced as long as the authors bio paragraph at the bottom of this article is included, the article is published "as is" (unedited) and all URL's are made active hyperlinks with no syntax changes.
-------------------------

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 or to apply for a personal loan online please visit: http://www.easy-approval-personal-loans.com

In The News:

Suzlon Rebounds as Loans Promise to Avert Default
BusinessWeek
By Natalie Obiko Pearson on May 25, 2012 Suzlon Energy Ltd.'s (SUEL) convertible bonds are rebounding from a four-month low after India's biggest wind-turbine maker obtained loan pledges to avoid default in the coming three weeks.

and more »

Christian Science Monitor
Student loan proposals from both parties denied
TheReporter.com
By AP WASHINGTON (AP) -- The Senate rejected dueling Democratic and Republican plans on Thursday for averting a July 1 doubling of interest rates on federal college loans for 7.4 million students, pushing back efforts to resolve the election-season ...
Psst, students. Still hope for low-rate student loans, despite Senate balkingChristian Science Monitor
Senate kills both sides' student loan plansThe Tennessean

all 522 news articles »

China Banks May Fall Short of Loan Target as Demand Slumps
San Francisco Chronicle
May 25 (Bloomberg) -- China's biggest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown crimps demand for credit, three bank officials with knowledge of the matter said.

and more »

Inpex, Total seek $20 bln loans for Australia LNG -sources
Reuters
Export credit agencies to drive funding * Deal shows investor appetite intact for well advanced, high quality projects * Japanese banks to drive pricing of loan By Sharon Klyne and Wakako Sato SYDNEY/TOKYO, May 25 (Reuters Basis Point) - Inpex Corp and ...

and more »

ECB loans, rate cut view pull down Euribor rates
Reuters
FRANKFURT, May 25 (Reuters) - Key euro zone bank-to-bank lending rates fell to new two-year lows on Friday, dragged down by the ECB's recent deluge of ultra-cheap bank loans and a growing expectation it will have to cut euro zone interest rates again ...

and more »

Home loan: prepayment helps
Hindustan Times
A home loan is usually the biggest debt that a person takes on during a lifetime. Given a long tenor and high amount of loan, the total interest you pay to the lender is almost as big, if not bigger, as the loan amount itself.

and more »

Oregon Bankers Association Celebrates Small Business Week with Tips on ...
MarketWatch (press release)
SALEM, Ore., May 25, 2012 /PRNewswire via COMTEX/ -- In honor of National Small Business Week (May 20-26), the Oregon Bankers Association (OBA) has issued tips to help small business acquire a loan from Oregon banks. The OBA has also developed a small ...
Deadline to Apply for SBA Economic Injury Disaster Loans in Rhode Island is ...U.S. Politics Today
Deadline for New York Private Non-Profit Organizations to Apply for SBA ...DigitalJournal.com (press release)

all 15 news articles »

Payday Loan Companies on Loans.net Find New Customers in Recent College ...
MarketWatch (press release)
NEW YORK, May 25, 2012 (GlobeNewswire via COMTEX) -- via PRWEB - For years, payday loans were used by a specific group of low-income wage earners in the US, but that has now changed according to a new study by ThinkFinance, which offers banking ...

and more »

Failing students on loans
msnbc.com
Gerry Connolly, D-Va., joins Chris Cillizza to discuss the student loan debate taking place on Capitol Hill. >>> congress rejected calls from president obama and mitt romney to keep student loan rates down and both pears are paving the way for rates to ...

MLive.com
Federal lawsuits for student loan recovery far less common in West Michigan ...
MLive.com
comThe number of lawsuits filed for student loan recovery is far larger on the east side of the state of Michigan than in West Michigan. GRAND RAPIDS, MI -- If you've defaulted on your student loans, you're far less likely to wind up in front of a ...

and more »

Google News