Everyone may be able to see the problems with payday loans
easily. However, you are stuck for money and there is nowhere else to
turn to but payday loan companies. Suddenly the instant cash advance
providers looks like your best pal. They charge a fair bit for the
favour. What are you going to do? The money is needed. You will take it
on the chin and go for it. That is what many people facing with
immediate payment do. It is easy to get qualified for the loan and it
takes only one hour to be approved in most cases. The money is in the
bank the next day. They have seen one of these adverts somewhere
already. So they grab the phone or get online and find hundreds of
providers of such loans or advertisers of such products.
The main issue with the payday loans are not necessarily the high fees. The real problem is the shortness of their payment terms. Many borrowers find that they need another loan to close the gap that the payday loan provider left. They take the money back from client's bank account as soon as his wage hit the bank. This could be as short as 14 days. It seems that quite a few of them get another payday loan and another after that. The cost of rolling over the loan keeps loading on making it impossible for someone in a tight budget to sort it out. This causes a serious concern.
It seems clear that there is a need for such establishments of short term lending. This is not a new issue. How the loan sharks have been operating for 100s of years? The only solution may be competition among them and it may be coming. There are new companies coming to market place. They are prepared to be more lenient with the payment period. This is exactly what is needed. The only solution to problems like this in an open market economy is competition. Payday loan companies will take notice very fast when they start losing customers to these new companies. Few companies now allow over 3 months for the loans to be paid back.
In 3 months a person should be able to recover from unexpected expenditure and manage to pay back the loan without needing any further loan. Or the person might get a personal loan with much lower interest rates or a credit card.
The main issue with the payday loans are not necessarily the high fees. The real problem is the shortness of their payment terms. Many borrowers find that they need another loan to close the gap that the payday loan provider left. They take the money back from client's bank account as soon as his wage hit the bank. This could be as short as 14 days. It seems that quite a few of them get another payday loan and another after that. The cost of rolling over the loan keeps loading on making it impossible for someone in a tight budget to sort it out. This causes a serious concern.
It seems clear that there is a need for such establishments of short term lending. This is not a new issue. How the loan sharks have been operating for 100s of years? The only solution may be competition among them and it may be coming. There are new companies coming to market place. They are prepared to be more lenient with the payment period. This is exactly what is needed. The only solution to problems like this in an open market economy is competition. Payday loan companies will take notice very fast when they start losing customers to these new companies. Few companies now allow over 3 months for the loans to be paid back.
In 3 months a person should be able to recover from unexpected expenditure and manage to pay back the loan without needing any further loan. Or the person might get a personal loan with much lower interest rates or a credit card.
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