‘Need Fast Cash’?
‘Advance Cash Offers!’
‘Fast Payday Loans at Low Rates’
If you have seen more and more storefronts putting up such signs all over America, then you have some idea about what Payday Loans are.
Payday loans work on a monthly check-to-check basis. If you have a shortfall in a specific month, you can take the payday loan and repay it when you get your next salary check.
In recent years, Payday Loans have become America’s number one source of getting instant cash. The attraction of easy money that is availed without much paperwork is too great for many people to pass.
According to some estimates, 12 million Americans use some avenue for accessing small dollar loans. The same estimate also states that there are more than 35000 businesses offering payday loans all over the country.
However, the attraction for fast cash ends there. Payday loans have been criticised by experts as being a bad avenue for availing loans. In the following section, we will look at some of the major reasons.
Table of Contents
Top Criticisms against Payday Loans
Unreal High Interest Rates-
Financial experts point out that the rate of interest charged on payday loans is as high as tem times that of a credit card. This means that people who avail such loans will always be burdened under the weight of unforgiving interest rates.
No Paperwork and Credibility-
Most Payday loan agencies do not even ask consumers to fill in the right paperwork. Where the money is coming from, what are the terms, is there any benefit, are important things that you never ever come to know.
Payday Loans propagate a vicious Debt Cycle-
According to reputed and established financial solutions companies like Pennon Partners, most people use payday loans to repay their debts. However, the high interest rates and bad terms and conditions perpetuate a never-ending debt cycle for the consumer.
Unlawful Harassment from Collection Agents-
There might be a number of reasons, why you could miss a loan payment. Unlike established banks and lenders, payday loan collectors do not follow any rules and regulations. They might come unannounced to your house at odd hours and create commotion. It is best to stay away from them at all costs.
Access and Linking to Bank Account-
Almost all Payday loan companies want you to link your bank account. This gives them access to withdraw the money directly from your account. There are numerous instances how this has been exploited and misused by many payday loan agencies.
Rather than opt for a Payday Loan to repay your debt, it is always a better idea to work with established financial companies. The formality, paperwork and professionalism means that you will never be exploited in an unfair manner. It also means that the entire process will be credible, legal and official.
The goal is to repay your debts in a structured and methodical manner. If the interest rates are low, then as a consumer, you stand to benefit in a major way. Do you think Americans should avoid Payday Loans in a major way?
Tell us your answers in the comments section below.