Under Consideration: Payday Loans

Payday loans have gotten a lot of bad publicity for many reasons. There are many things that can be said about them, good and bad. While there are a lot of things that can be said, there is a huge market for those that use these services. The numbers of people that are dependent on payday loans at least once a year is growing annually and will likely continue to grow.

There are many arguments that can be had about payday loans. Each side often has an agenda and wants to sway the public for or against these loans. Those that are considering a payday loan should always look at their need objectively and all sides of the payday loan argument.

The Pros

When people are in a financial bind, they need help. Those that don’t have great credit options will find their financial options are limited and payday loans are very attractive. There are many things these loans will do for those that are in need of the assistance.

Immediate Decisions and Financial Help- When people apply for a payday loan, they need help as soon as possible. Many situations can’t wait for the waiting period that many traditional lenders have for loans. Because the decision making period is quick, most people explore other options and use payday loans as a last resort.

Credit Isn’t an Issue- There are millions of people that have jobs but don’t have great credit. Unfortunately, this is a repeating process and concept. When people have limited access to traditional help, payday loans are available. Because the qualifications are dependent upon having a job and a bank account, people don’t have to worry about their credit stopping their application.

The Cons

Just as there are benefits of payday loans, there are definite drawbacks and critics.

High Interest Rates- What many people in financial need don’t always consider are the interest rates they are agreeing to when accepting payday loans. There are some payday loan companies that have interest rates as high as 300% on some of their loans. This is far above the rates charged by traditional lenders.

Unbending Repayment Schedules and Access- Once a payday loan has gone into repayment status, it has to be repaid. There are some people that aren’t prepared to budget large repayment amounts with their normal budget. Because payday lenders demand access to their client’s bank accounts, the payments are directly taken out. It doesn’t matter what else has to be repaid or if the funds are there. The draft is automatic.

The Reality

No matter what the arguments are, people will always need fast financial assistance. There are some that are better prepared to repay the loans than others. People that need the assistance that payday loans offer should know what they can and can’t repay. The decision should always be made with knowledge and understanding of the consequences. Those that can’t afford to repay the loans shouldn’t apply for them. They should look to alternative financial assistance. Those that can afford the repayments should shop around for the best loan available.

Payday loans were not created to hurt anyone. Some may think they are predatory and others may feel they are a wonderful tool for the financially challenged. No matter who is arguing the payday loan industry has a huge market that won’t diminish for generations to come.

Jun. 24 14'

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