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When polls are taken on the roles and risks of payday loan lenders, people respond with various attitudes. Some people feel that these lenders are only trying to make a dollar and take advantage of people in need. Others feel that the lenders are trying to help people in a financial emergency by offering them a way to make ends meet when there is not other option. Regardless of your personal opinion, payday loan lenders exist and people use them everyday for some type of financial assistance. But it is really up to the borrower to decide on weather or not they will let a lender take advantage of them or let them help them in a tight spot.
Payday loans are cash advances off of your next regular paycheck. These are short-term loans that only last for a couple of weeks. The amounts that can be borrowed vary from $100 to $1500, depending on what you bring home on a paycheck. The goal of a payday loan is to assist you in paying for an unanticipated expense that has occurred between paydays-just enough to help you out until your next paycheck arrives. Since repayment is due back on your next payday, lenders can even approve those with poor credit. These loans are fast and easy to obtain. In some cases you can get through the whole process in a matter of hours instead of days or weeks.
The roles and risks of payday lenders are to give you immediate access to cash that you would not otherwise have until your next payday. These loans are considered unsecured, but guarantee of repayment comes from the proof of your employment and your next paycheck. This is how lenders are able to approve people with poor credit. A traditional loan at a regular financial institution would not be able to do this. Their policies require that a credit history be used to determine eligibility. Payday lenders assume the risk of loaning to people who could potentially default on the loan. That is one reason why the interest rates on these loans are so high, not to mention they are only for a few weeks and that no collateral is involved.
So are payday lenders really bad or good? That is totally up to the borrower. When deciding to obtain a payday loan, one must research the company he is considering. Comparison-shopping is definitely a plus. The borrower must decide not to be taken advantage of and find a lender that is legitimate and has decent or competitive rates. The borrower must also decide to only get the loan for the amount needed-not extra. Due to the repayment coming out the borrower’s next paycheck, over borrowing and spending can lead to a terrible cycle of depending on payday loans. In the end it is the borrower’s choice to either let a payday lender help them in a financial emergency or let the lender take them for all they are worth. Some prioritizing, planning and budgeting is all it takes to not let a lender get the best of you!
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