In fact, a payday loan goes by many names. Some call it a cash advance loan. Some think of it as a paycheck advance loan. Another name is often a postdated check loan. Some others call it deferred deposit check loan. The US Federal Trade Commission calls it “expensive cash.” Regardless of what you call it, it’s really the same thing: a fairly small short-term loan (usually $50 to $500) that carries a hefty interest rate.
Why would you get a payday loan?
Payday loans are preferred for many reasons. For those who are actually in a position to require one, its benefits outnumber its drawbacks. And there really are shortcomings; however, we will analyze these aspects later.
For starters, put yourself in the shoes of the person who needs some quick cash. Perhaps you have just been placed in the unenviable situation of suddenly needing some money and being caught off guard. You may have had a totally unexpected health care bill or perhaps a car repair bill, or you really need to take an unexpected trip, such as the death of a family member. Some people who want quick funds use it to disburse their daily expenses such as rent, groceries, utilities, etc. Whatever the reason, you desperately need that money and you just don’t have it right now.
Is a payday loan really your last option? Do you have any other different solutions I could check out first? Well, what are often the merits of payday loans? Let’s find out:
1. You really don’t have to go through the hassle of a credit check.
2. You may complete an application in person, by phone, or online.
3. The procedure normally takes less than 20 minutes.
4. Loan funds are conveniently deposited into your bank account in less than a day.
5. It’s very affordable, at least to start with: you really don’t have any upfront costs.
6. It is very discreet: no one else is involved in the process.
7. It’s safe: Your financial details are not discussed with others.
Well, that makes sense. These are good reasons to get rid of the stress of running out of money. It’s really a “quick fix”. You will be able to cover the shortage and move on with your life. And you will be able to pay the next payday, correct? So you have resolved your situation.
Where could I get a payday loan?
Payday loan firms are practically everywhere. There are more than 10,000 payday loan outlets in operation in the US and they are distributed identically around the world. If there is no payday loan store near you, you can search the Internet and discover many payday loans online.
These providers are in business to “help” people in dire financial need. They give these types of loans to people who cannot get the money they need anywhere else. Let us now profile a company that provides payday loans as part of its primarily financial services business: Money Mart.
Money Mart was basically promoted as an alternative to banks. Their hours would extend beyond banking hours and they would be located in places that are much more accessible than banks. They can cash checks even when banks are closed, and people won’t have to travel far to receive their services. They should have been on the right track as of today, they have 1700 locations in Canada, the US and the UK.
A typical Money Mart customer is actually an average working person, 32 years old (82% of the clientele is under 45) and currently employed, with annual income around the national average. These customers come to Money Mart for its fast service, easy locations, and long hours of operation. The Money Mart entrepreneurs were right: their core ideas, however, are still valid today.
Ever since they included payday cash advances in their money services, they have carved a pretty niche for themselves in the market. But they are certainly not the only option. Today you can find a minimum of one, and usually several, payday loan facilities in almost every community.
Why precisely would you choose not to get a payday loan?
Now that we’ve investigated the convenience of payday loans, let’s just take a look at the downsides. Throughout the United States of America, governments at virtually all levels are looking to payday loan channels with increasing concern. Many people feel that they take full advantage of low-income people in financial difficulty. Some go so far as to express that they are “taken advantage of”. Their argument is that they are fulfilling a requirement and are not doing anything illegal. So the debate continues: let’s examine why.
Do you remember when you thought you had solved your difficulty and could continue with your routines? Well, what if maybe your next paycheck, after your planned expenses, wasn’t good enough to pay off the obligation?
If you may have fallen short yet again, you needn’t worry: payday loans are extendable or renewable. This procedure is called a “transfer,” and when you do the same thing too many times, it can end up costing you a lot of money. Let’s study an example: Let’s say you borrowed $100 for 2 weeks (until your next payday). You give the loan provider a check for $115 (including your $15 fee). The APR on that loan is actually 391%! If you may not be able to pay the $115 by the due date, you can renew the loan for a couple more weeks. If you maybe roll over the loan 3 times, the loan fee will come to $60 for a $100 loan. That’s pretty substantial interest, don’t you think?
These are details to consider when deciding if a cash advance payday loan is the right solution for your particular circumstance. Sure, the cost of the loan is substantial, yet it provides you with the funds you need, whenever you need them, thus avoiding a lot of stress and hassle. It is quite true in today’s consumerism that convenience will cost you money. However, is it worth that much? That’s a question you’ll really have to answer on your own.
Payday loans tend to be controversial; however, they fill a need.
At this point we’ve obviously presented both sides of the argument, and it’s really a big debate of late. So which party are you going with? That depends on your current situation. If you really need to have it, and you really don’t have a choice, then a payday loan is probably the wisest thing for you. At a minimum, you’ll be in a position to maintain your peace of mind, even when it costs you some money.
When you’re done with this scenario, use it as an opportunity to learn. Note that there are hardly any bugs, just lessons. When you need to get a payday loan, make sure you don’t renew it too many times; that’s when it will really become a problem. Also in the meantime, try creating a crisis fund so you can cover those unforeseen expenses. Become a good financial manager. Then you’d have an alternative, and you wouldn’t have to rely on a payday loan as “your last resort.”
