Payday Loans - Not As Simple As It Appears
Payday loans are designed to be quick and easy. And they really are as quick and easy as any type of loan gets. But underneath the quick solution, there are complications. This doesn't necessarily make payday loans a bad thing, it just makes it something to approach with care and a clear head.
The Importance Of Responsible Borrowing
To get back to the point of how quick and easy it is to secure a payday loan, the overall design is aimed at speed. Why? Because people like getting money, and they like getting it now. In other words, a payday loan can hit two birds with one stone.
But if the process is really so straightforward, then why is the contract several pages in length? Of course, few people actually take the time to read the contract, because how complicated can a payday loan be? And besides, they get to take home the money within a few hours, so why bother with the fine print?
Because it speaks to a person's attitude in regards to responsible borrowing. Only someone who takes every loan very seriously will know exactly what the contract states, even when it's an emergency situation where money is urgently needed.
Everybody knows that a quick loan is specifically designed to prevent individuals from doubting their decision. Before they know it, the papers are signed and the money is being transferred.
If attention is not paid to the contract being signed, it empowers the lender to add more fees, which the borrower only realizes when it is too late. But responsible borrowing doesn't end with reading the contract.
Being able to assess whether a loan is actually going to help is a big part of responsible borrowing, and whether the commitment can be upheld is another. Because when a person doesn't live up to their loan commitments, it breaks down their credit score and ruins their chances of getting more significant and substantial financing down the line.
And what about the emotional distress that comes with running away from loan companies and avoiding all calls? Responsible borrowing means not having sleepless nights over debt that is falling behind.
The Restriction Of Cash Advance Loans In Certain States
The requirements to qualify for an advanced loan are minimal. All that is needed is an address, a phone number, and a permanent income, which should be enough to cover the repayment at the next pay date. No credit check is necessary, and the money is received almost instantly.
But thanks to this quick process, some states are more wary about payday loan companies, which is why they have certain restrictions in place to protect the consumer. For example:
- New York
- New Jersey
- North Carolina
These are some of the states that either restrict or prohibit cash advance loans. And the restrictions are directly tied to the interest rate they are allowed to charge.
However, there are states that don't restrict high rates. These include:
- North Dakota
These states let individuals look out for their own interests when borrowing money, and with the clever way lending companies operate, the importance of responsible borrowing comes to mind. It is with good reason that some states implemented restrictions, and it only ratifies why every loan (no matter how small or quick) should be approached with a balanced outlook.
Everyone who has made use of Payday Loans will understand the love/hate relationship they are based upon. The moment you get the money, you love the lender. But when the end of the month comes along, there is no trace of that love anywhere to be found. Instead, your "love" turns to hate, because it is time to pay the money back - with interest.
State and Federal Authorities on Payday Loans
Before going deeper into this love/hate relationship, let's take a look at the way different states and federal authorities handle Payday Loans. Or more specifically, how many of them actually feel the need to protect the consumer against high-interest rates. As it stands, at least fifteen states are focused on preventing extremely high-cost Payday Loans. For example, Georgia doesn't even allow Payday Loans and prohibits them by labeling the service as racketeering. New York and New Jersey also protect consumers by capping the annual interest rates to 25 and 30% respectively. The states that join them all use federal law to curb how much lenders can potentially earn from an individual Payday Loan, hoping it won't drag consumers deeper into financial strains. Then there are states like Maine, Oregon, and Colorado, which permit lower-cost payday lending. This leaves thirty-two states that don't care about consumer protection. In other words, they authorized high-cost Payday Loans either because they couldn't cover the loopholes used by the lending industry to push for higher rates, they removed all the caps related to small loans, or they simply enacted it through legislation. Some of these states include Alabama, Kentucky, Rhode Island, South Carolina, Washington, Texas, and California.
People's Attitude towards Payday Loans
As mentioned above, the people who make use of Payday Loans don't see things the way government does. And by looking at the numbers, most states don't even see a problem with the way lenders are doing business. And are they really so wrong for having this "reckless" attitude?
Because when it comes down to it, when you need money in the heat of the moment, the long-term consequences don't matter. You have something that requires urgent financial attention, and lenders that offer Payday Loans provide such a quick and effective answer. They don't ask too many questions, and your credit score won't have such a big influence on whether you even get approved. Plus, you get the money almost instantly. In essence, lenders make it incredibly easy for individuals to survive their immediate financial circumstances. And if you are one of those people who couldn't think of another way to get your hands on some money without doing anything illegal, it is a service that comes in very handy.
But at the same time, borrowers want to crucify Payday Loan lenders. They want to make noise about the high rates connected to the amount they have to pay back, although they didn't consider it when the money was needed. Yes, there is no denying that the high rates can be showcased as mere exploitation of desperate people, but did those people have anybody else to turn to at that point of desperation? And if they did, wouldn't it have made more sense to use the alternative?
Are Payday Loans Really A Bad Thing?
As much as we would like to blame lenders for putting us deeper in financial distress, it is not their mission in life or company motto. Instead, these are companies that aim to make a profit from their business dynamic, just like every other business aims to take home the highest profit margin possible. And as easy as lenders make it for people to have access to Payday Loans, it is just as easy for the borrower to shift the blame onto the lender. It is easy to accuse lenders of exploiting consumers, but who approached who exactly? The fact of the matter is that consumers seek out these types of loans. Of course, lenders advertise their services, but it is the consumer who makes the call and ultimately gets the ball rolling. This isn't to say that several lenders don't care much for an ethical business structure, but if they don't lend you the money, do you know somebody else who will?
Payday Loans are not such a bad thing if you handle it responsibly and with a clear head. If you actually take the time to read the fine print, ask the necessary questions, and find out exactly what you'll be paying, it is a service that can save you from an emergency situation. For the individuals who hastily rush into a Payday Loan, it is typically much easier for them to blame the company that gives them the money in a situation where they desperately need it. And it's situations like these that make you wonder, is it the lending company that doesn't have any ethics? Or is it way to deal with a short-sighted decision, seeing as lenders already have a stigma attached to them?
Often enough, you may find that you are in need of a loan. You can either go to the bank or borrow from your family or friends. However, if that is not a viable option for you, you can always try cash advance online. It is a system where money lenders online have potential clients fill in application forms with their information to apply for the loan. Although this seems easy enough, there are both advantages and disadvantages of this method of obtaining cash.
Cash advance online is quick, and you will get your cash pretty fast if your loan is approved. In some cases, it is placed in the bank in as fast as 24 hours. This is advantageous especially if you need the cash urgently. It ensures that you do not dwell too long on your money problem. If you need to travel or pay any bills, then this is an excellent option for getting cash fast.
2. Easier Process
Normally with a bank, you have to get your credit score checked. If you have a low score, then there is a very high chance your loan will be denied. With cash advance online, your credit score will not be the only determiner of whether or not you get the cash. You can show them proof of your salary and give an exact date for repaying the loan.
This method is advantageous because you do not have to dress up and go to an office to apply for the loan. You only need to have a computer and then start the process. Since the information required is not too detailed, the application is easy. That means that you will not have to worry about traveling to offices, meeting lenders in person or such. You can apply for the loan at any place and any time.
This method of obtaining cash is discreet because you will not need to have a guarantor. If you do not wish to bother your friends or family with the problem, you can get cash this way. The lenders will also review your application and send money without having to involve anyone in your life. This process is better for anyone that wants to get cash fast discreetly.
As much as it is easy and quick, obtaining the cash advance online has several disadvantages.
1. High-Interest Rates
Since the lenders are not banks, they operate under different systems. They have higher interest rates due to the numerous risks that they take. That means that in the end, you will spend a lot more money to repay them. If you do not repay the loan on the day that has been set, then the charges become higher, and you may find yourself in a deep financial hole.
2. Risk of Being Extravagant
Since the process of getting the cash is so much easier, most people get tempted to take the loans and repay them when they get their paychecks. This can cause a person to take the loan even when they do not need the money that much. It can cause one to have poor spending habits since they figure they can just get the loan and repay it later.
Obtaining cash advance online has the disadvantage of attracting fraudsters who are after people's private information. Since you are not always aware of how much you can trust a lender on the sites, you can be at a risk of giving your personal information to the wrong person.
4. Risk of Skip Trace
If you do not repay the loan, the lenders will have to send skip trace agents to get the money back. If you do not have the funds, then there is the possibility of your personal items being taken. It could become a huge loss for you eventually.
Tips When Obtaining Cash Advance Online
This is always advisable to avoid giving your information to the wrong person. There is also the issue of high-interest rates. Check that the lenders have reasonable interest rates so that you will not succumb to financial difficulties in the future.
It is advisable to assess your situation and see whether it is a real emergency before getting the loan. This will prevent you from being careless and taking the cash advance only to use it on something that is not very important. Because the loans are easy to come by, most people get excited and forget that there will be an interest charged when repaying the loan. If you do not have an emergency, then do not get the loan. You should go with a company that has a good reputation and preferably offers financial advice to clients. This will prevent you from having considerable debts in the future.