Payday loans are short-term loans which people can borrow if they need a small amount of money before their next payday. One needs to prove that he has employment records and submit required documents in order to get the required amount which his paycheck can cover including an additional amount of interest rate.
There are a lot of reasons why people use this opportunity called payday loans.
Dealing with unexpected expenses is becoming a daily issue. The modern way of life imposes the constant need of money. Given that fact, people are obliged to seek ways for additional income.
The amount of borrowed money is not so high and the interest rate seems payable, even though it is extremely high taking into account the amount of borrowed money.
How does this process function? Well, it is quite simple. The borrower has to submit the proof that he has an employment record and some additional documents. The process doesn’t last long, if you can prove that you can repay the debt then you will get your money in record time. Your check will be kept and cashed on your next payday and that’s all about the process.
Of course, the borrower will not pay only the amount of money he has borrowed. He will also pay a certain percentage rate of a loan. These interest rates are usually very high, even though the annual percentage rate is limited by some jurisdictions. Yet, there is a lot of criticism of these companies and their practice.
But in most countries, this rate is not limited, especially in the low-income communities. These communities are one of the target groups of companies that offer payday loans. They paycheck will hardly cover their needs, they will need more money and this is how the circle without end begins, it has no beginning and it has no end. So, as always the secret is in moderation. And the formula is pretty simple: don’t borrow if you are not able to pay back and if you are not able to live the rest of the month without new borrowing.
In most of the countries these companies are allowed to set their own interest rates and in the end, people pay double the amount of money borrowed. But, since life has its own directions and situations when we need the short- term borrowing happen all the time, there is no wonder that this service has a great number of users regardless of interest rate they must pay.
When we need to deal with a large expense, we are not aware of the price we will have to pay if using payday loan and this unawareness will cost us twice as much. Of course, it can be of much help if we are aware of our needs and of our financial possibilities. Borrow as much as you are able to pay back.
Payday loans can be a great solution for our financial situations. We are able to borrow the amount of money that will not endanger our financial situation and we don’t have to be afraid of the possibility that the lender will take our property as in other types of loans. Furthermore, this can be a great solution for people who can handle their expenses with the small amounts of borrowed money. The person who decides to take the payday loan will have to pay the additional costs that include the amount of the interest rate, but this is the case in every situation when the person borrows money. There are some requested that has to be fulfilled.
The level of the interest rate can be high but sometimes even that price is negligible compared to the costs and the problems we might have if we don’t have that money at the right moment. As for the lending companies, they have their conditions and requirements and no one will force you to lend the money and agree to their conditions. They have the right to set their own rules and requirements as well as you to accept or not to accept their conditions.
The lending companies have a bad rep and people tend to blame them for their rash and hasty decisions. The conditions are specified in every contract and once the person signs the contract, it means that he or she is obliged to comply with the signed conditions. The lending company is not responsible if the borrower sign the contract first and after that realizes that it is not fair or that the interest rate is too high. Who is to blame is the borrower didn’t use his right and has not obtained all required information and explanation? And there is where the use of holes in the law will begin. This is the reason why the borrower must read the conditions carefully, especially those terms printed in small letters, and think carefully.
Borrowing is the business and every business tends to make as much money as possible. And as every business will do, the borrowing companies will use all means to promote their business and their services.
Once the borrower signs the contract, there is no law that will protect him. This is the reason why every potential borrower should be informed as much as possible before using the payday loan.
The lender is not responsible if you want to borrow bigger amount than you can repay. The lender is not responsible if you borrow for non-essential. And the borrower is not responsible if you have failed to calculate your actual financial possibilities.
No matter how senseless and hardhearted the lending companies might be or seem, the borrower is to make the final decisions. The lender is not guilty if the borrower fails to calculate and plan his financial possibilities.