Payday Loans, Positives And Negatives Explored. PDF Print E-mail
Written by Lucy Challinor   
Saturday, 23 January 2010 14:34
Many individuals are strapped for money, due to the problems pertaining to today's economy. With the rising costs of everyday living, people tend to reach out to credit card companies for assistance, when the 'going gets tough'. Once this occurs, these individuals tend to get deeper in debt until they look to other measures; drastic ones, such as 'payday loans'. This can seem to be a relief for these persons, however sometimes the relief turns into a travesty.
by LucyChallinor


Many individuals are strapped for money, due to the problems pertaining to today's economy. With the rising costs of everyday living, people tend to reach out to credit card companies for assistance, when the 'going gets tough'. Once this occurs, these individuals tend to get deeper in debt until they look to other measures; drastic ones, such as 'payday loans'. This can seem to be a relief for these persons, however sometimes the relief turns into a travesty.

Advantages - These loans are quick, with loan amounts being deposited directly into their checking accounts, and their requirements sparse. Persons who are 18 years of age or older, have active checking accounts, and are employed can qualify for tees types of 'quick advance' loans, upon approval from the lending companies. Online sites host applications in relation to these loans, thus being convenient measures for prospective borrowers. Since there is not a lot of paperwork, many people are drawn to these types of 'quick money fixes'. The repay period seems to be logical, since it is made to correspond with individuals' paydays. There is a high rate of approval for individuals with bad credit.

Drawbacks - They do have a number of drawbacks, especially those pertaining to the interest rate that they offer. These elevated rates are made to initiate more funds to the lenders, at the expense of the borrowing individuals.

Cons - Of course, when there are pros, there will be cons. On such drawback is the high amount of interest that is charged. However when individuals are 'in a jam' this is not a big concern. Another weakness of this type of loan is that it causes people to attain unsecured debt. If individuals fail to repay the loan, the lending company may try to withdraw their payment from a checking account.

If there are no funds available, the account will overdraw which will most likely cost the individual's additional fees, and the lending company may aggressively contact the borrowers for repayment. It can become a nightmare, when this happens. Some people may fall victim to lenders who fraudulently betray them, since they have all of the pertinent information to do so.

Each state is responsible for setting the regulations for payday loan companies and monitoring these companies, so that they will not 'cross the line' in relation to legal boundaries.

Each state has a different set and/ or standards of laws that pertain to lending companies; however it is up to the persons obtaining the funds to be responsible enough to research and find reputable companies with affordable interest rates. When this is done, they might be the answer to quick money.

All in all, payday loans are sometimes good for short period financial recoveries, however can be poor choices in the long run. It is up to borrowers to do proper research regarding the types of companies and contracts that are available, prior to commitment of these negotiations and/ or contracts. Upon completion of these tasks, people should be familiar with the contracts that they will be entrusted and the results should hold very few surprises in the process of obtaining these loans.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

There are pro's and indeed con's when considering payday loans. They are an important element of accessing a loan quickly for some, and therefore are useful for some. If a Payday Loan is what you need make sure the necessary funds are there when you next get your wages paid.