Payday Loans

Payday Loans – Rip Off or Useful Service?

There has been a lot of talk about the payday loan industry as of late. In the United Kingdom and United States there is a lot of talk about the ills of the industry and the reasons why the regulation is not very tight. The high costs and interest rates are often cited as being detrimental to the interest of the general populace. Nonetheless, they serve a useful purpose that many people need. The payday loan industry has helped many people over the years and looks to be continuing with the same trend. Below we will offer a brief synopsis of the industry and why people are debating whether or not it is a rip off or a useful service.

What is a Payday Loan?

A payday loan is a very small loan that is usually given in advance of payday so that people can use the money when they need it. These are often used for emergencies and other types of scenarios when money is tight and a paycheck is still not yet available to pay for the expenses. Many of the people who use payday loans are often already financially strapped. Many have poor credit and are largely unable to pay back most of their debts. These type of people borrow money and often cannot repay, which is one of the reasons that so many lenders increase the prices.

There are a few drawbacks with payday loans that should be identified. First of all, there are higher interest rates than most other types of loans just because the amount of money borrowed is small and the rate in which people do not pay debts back is large. These factors increase the interest rate quite a lot, but not unbearably. While it is definitely not industry wide, some of the worst payday lenders are not very nice about reclaiming their dues. Most of them will be exceptionally respectful of your privacy, but there are a few that you must watch out for.

Benefits

While there are drawbacks to the payday loan industry, there are definitely many benefits as well. For people who are struggling to survive and eat, this type of money is easy to come by. This makes sure that people with bad credit will at least be able to survive if they have to pay for rent or some other aspect of life.

In addition, the money is usually very fast. If you are in need of emergency funds for a medical emergency you will not have to spend hours waiting for a reply for the loan. You will most likely be able to get the loan quickly so that you can pay for the medical bills without delay. For people who need fast cash in the United Kingdom, this is definitely the route to go.

Overall, there are many benefits and only a few drawbacks to payday loans. If you are in need of money then the industry is very beneficial as a useful service to you, just remember, they are not a long term solution!