Do Payday Loans Deserve their Bad Reputation?

Payday loans have had a great deal of bad press in the last few years. Scare stories abound of unfortunate cases where vulnerable people have taken out payday loans and ended up unable to make the repayments, eventually falling into terrible debt. But although payday loans are not for everyone, are there any circumstances where they are useful to those in need?

Why Would I Need a Payday Loan?

When Mr and Mrs Average need a bit extra to pay for a fancy holiday or new car, they can either put the expense on a credit card and pay it off a few months later, or nip down the high street and apply for an unsecured personal loan from their bank or building society. This suits them just fine because they have a good credit rating and lenders are falling over themselves to throw money at them.

When Lending Options are Limited

Sadly the situation is very different for a large number of other people. Not everyone is able to apply for personal loans and credit cards. Some don’t earn enough to be eligible for credit offered by high street lenders now that the lending rules have been tightened, and others have bad credit thanks to poor borrowing habits in the past. So when these people need a bit extra to pay for unexpected expenses, they have far fewer options to choose from, which is when payday loans can be very useful.

How is a Payday Loan Different from a Personal Loan?

Payday loans are designed to be a short-term loan and money is typically borrowed for one month or less.

You decide how much money you need and how long you need it for and the interest is calculated accordingly, so you know exactly how much you need to pay right from the start of the loan agreement. Even people with poor credit ratings are eligible for a payday loan. The online application procedure is very simple and most people will be given a decision within a few minutes.

Why do Payday Loans Have Such a Terrible Reputation?

Payday loans are very useful for people who need a bit of extra cash but have no way of borrowing the money from any other source. As long as the loan is paid back on time, no further interest will be accrued and life goes on as normal. Unfortunately, some people choose to borrow more than they can afford to pay back and end up owing significant amounts of interest, which is compounded by further fees for late payments.

Are There Unscrupulous Payday Loans Companies Out There?

Thanks to the current economic recession, the payday loans business is booming and more than a few disreputable types are cashing in. Sadly, this is not good news for the unwary borrower as some of the smaller lenders are little more than glorified loan sharks in sheep’s clothing. It is always better to stick to the well-known payday loan companies. However, before you decide to take out a payday loan, do a due-diligence check and research the credentials of the payday loan company you are considering using to make sure that they have a good reputation.

What Type of Person Should Not Borrow Money from a Payday Loan Company?

Getting into debt is no laughing matter and once you find yourself in a perilous situation whereby you are struggling to meet the repayments on several loans and credit cards, and you have no cash to pay for the basics such as rent, food and heat, a payday loan is really not the answer. So if this sounds like your current financial situation, you need to seek debt management advice immediately before things escalate.

So, Do Payday Loans Really Deserve their Bad Reputation?

It is fair to say that some payday loans companies probably do deserve their bad reputation, but not all should be tarred with the same sticky brush. There are plenty of reputable payday loan companies out there and

as long as you borrow responsibly, you should have no problems whatsoever.

And with banks typically charging around $35 per day for an unauthorized overdraft, you may even find that a payday loan is much cheaper than overdraft fees!

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5 Comments

  • MARIZZA says:

    just needed money bad, good thing i could get a payday loan. helped me out when i needed it

  • Claudia says:

    Sometimes u need emergency funds

  • Shelly says:

    All I need is $3000, to get my divorce paperwork going. I was hoping he (wish it was over) started it. I am working with a debt consolidation. But found out there is things on my credit report, that is over 10 years. Is there any one online that can help me????

  • Valeriemarks says:

    Looking for a loan to tpay for things I owe like friends and personal other stuff bills cards and I have no credit for I’m behind on it all for I was sick for some time and couldn’t be there to do it so I want a loan to get back in the groove

  • SUSAN FROSSARD says:

    I AM INNEED OF A LOAN. I NEED AROUND5000.BUT SEE THAT YOU CAN ONOY GO TO 2500WHICH IS FINE – I CAN CHECK WITH OTHER LENDERS. AND THANK YOU SO MUCH FOR BEING THERE WHEN NEEDED. I WILL CERTAINLY PASSTHE WORD ALONG WHEN ANONE NEED HELP.
    GODBLESS

    SUSAN

    sORRY MY KEYBOARD NNEEDS EPLACING

Payday Consumer Notice:

APR

The APR of a payday loan varies in each state and depends on the lender, the advance amount, fees and terms of the transaction. The APR in our network of lenders can range from 265.36% to more than 700% on 14 day terms.

Implications of non-payment

Implications of non-payment vary from lender to lender and by state regulations. If you are unable to repay your loan you may have one or all of the consequences listed below depending upon the terms of your lender. Fees may include but are not limited to: insufficient fund fees, administrative fees, late fees, non-payment fees, court costs and legal fees.

Collection Practices, Credit Score Impact

Payday Loans are due and payable in full in one payment at the end of the loan term, unless the Lender offers renewals or other repayment options. Make sure to review the terms and conditions of your lender if you fail to pay on time.

  • Late payments of loans may result in additional fees or collection activities, or both. Each Lender has their own terms and conditions, please review their policies for further information.
  • Non-payment of credit could result in collection activities and your account could be turned over to a collection agency. Each Lender has their own terms and conditions, please review their policies for further information.
  • Failure to pay your loan on time could result in your lender reporting the delinquency to a credit reporting agency. This could result in the lowering of your credit score which could make borrowing more expensive in the future.

Renewal Policy

Renewal policies vary not only by lender but also by state regulations. Every Lender has their own renewal policy, which may differ from Lender to Lender. Renewal fees vary by lender. Please review your state regulations and you lender's renewal policy, terms and conditions.