Payday Loans A Boon Or A Curse

Payday Loans A Boon Or A Curse



Payday Loans - a​ Boon or​ a​ Curse!!
A small temporary loan taken to​ bridge the​ borrower's cash flow gap between paydays,​ is​ referred to​ as​ a​ payday loan .​
They are unsecured,​ high-interest short-term micro loans .​
These loans are usually arranged in​ cash,​ and the​ lender processes the​ check or​ takes out from the​ borrower's checking account on​ the​ date of​ maturity .​
The process:
Many states in​ the​ U.S have usury laws that prohibit interest rates if​ they exceed the​ annual percentage rates .​
For example if​ you​ need a​ payday loan,​ you​ would have to​ write a​ post dated check for $315 to​ borrow $300 for a​ period of​ two weeks; the​ extra amount being the​ finance charge,​ and the​ lender will give you​ his assurance to​ wait till the​ next payday .​
If you​ fail to​ repay,​ then the​ lender can deposit the​ check of​ $315 .​
In most of​ the​ states the​ rollovers are forbidden,​ as​ the​ financial charge goes on​ increasing .​
In the​ U.S .​
this payday check has been prohibited in​ thirteen states.
Lenders:
Quite often these payday lenders are criticized .​
They are called the​ merciless loan sharks attacking the​ poorer section,​ low income areas,​ who are unable to​ comprehend the​ time value of​ money .​
Many people find the​ interest rate on​ the​ payday loan puts the​ weaker section in​ difficulties,​ where the​ richer community can afford to​ pay even up to​ 25% interest or​ so on​ their credit cards.
You have to​ be extremely careful if​ you​ are planning to​ take a​ payday loan .​
Sometimes after writing a​ check of​ $350 in​ exchange for $300 in​ cash,​ things might come up and you​ might not be able to​ pay back the​ money within the​ allotted two weeks limit,​ thus the​ roll over loan will start and you​ may end up paying as​ high as​ $500,​ and may still need to​ pay the​ original $300 amount! It has been recorded that some borrowers have even been charged as​ high as​ 1800% interest on​ a​ very small loan .​
The authorities are now trying to​ track down these loan sharks who are charging around 700% interest rates.
According to​ a​ research survey it​ has been recorded that after deducting the​ fixed operating cost and the​ default losses,​ the​ payday loans company does not make much profit .​
There have been cases of​ fake checks presented by borrowers as​ security,​ and as​ a​ result,​ the​ check bounces .​
Payday loans can save you:
Had it​ been possible to​ know or​ predict financial emergencies,​ then payday loans would not have happened! Many a​ time you​ may find yourself caught in​ unexpected situations and you​ may not be well equipped to​ deal with the​ situation .​
Like when you​ fall ill,​ or​ your car breaks down,​ you​ would have to​ bear on​ your planning budget for the​ month .​
So for these kinds of​ situations,​ payday loans are of​ great help as​ you​ can get instant cash .​
You can even apply for it​ online,​ and the​ money gets deposited into your account directly.
It's simply not humanly possible to​ plan for every penny and every move life makes .​
If you're on​ a​ shoestring budget,​ then you're aware of​ the​ danger of​ unexpected costs.




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