Payday Loans: Does it really serve the purpose?

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Payday loans are generally criticized by the fact that they trap individuals in a vicious cycle of debts and their repayments. To pay them back, all the income money is drained and you need to borrow again. If we check on the concept of a Payday loan, it was designed to meet short term financial goals. This is a type of financial relief until you get the next salary deposited into your bank account. 


Payday loans have become a very popular service trend and more than 15000 payday loan service providers exist in the United States. The features of payday loans are quite amazing and that is why more and more people enter in this system. It seems like lenders tried to catch on the weaknesses of conventional banking institutions and use them for their benefit. 


Conventional financial plans have a long haul process to provide loans to people. They have strict criteria to qualify people for the loan schemes and a tiresome documentation process. This means that very fewer people were able to get financial support from these institutions. 


Payday loans have a basic criterion to provide loans to individuals. They only require proof of stable income to release the loan. This is where the masses can avail financial support services. As it is an unsecured loan with no guarantee for the lenders, the interest rate is a bit high. For each $100 borrowed, lenders will charge between $15 to $30. This depends on the time of year, demand and supply of money. 


Different states have set up laws on how much amount can be borrowed through Payday loans. The interest rates also differ in different localities. If you are located in Edmonton, then you can apply for payday loans in Edmonton today. The application forms are to be filled online and you can get funds transferred within a day or two. 


With Payday loans, lenders have a very short process of verification and documentation. This leads to happy customers as they can get hands-on money while sitting at home. This money can be used anywhere where you feel like using it. With traditional loans and credit card, the usability is limited. 


Criticizing the loan providers may not be the right thing to do. They are here to support you and also generate some profit for themselves. The responsibility lies with each of the individuals who are applying for a payday loan. According to a survey, 51% of participants contended with Payday Loans service and they were able to counter financial constraints. 


So, we have to borrow only that much amount which we can easily payback. It is never an ideal situation where we get extravagant in borrowing money and always depend on them to serve our purpose. It is okay to get short term financing due to any financial emergency. But we need to plan to get rid of them as quickly as possible. 



Disclaimer: This content does not necessarily represent the views of IWB.

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