The payday loans industry has seen exponential growth in recent years with the availability of these loans now reaching all members of society
. With the recent economic downturn many people are now turning to this form of lending because they are unable to obtain credit from traditional lenders such as their bank.
Accessibility has also been a key factor in the popularity of payday loans with most applications being done online through lenders websites. In the fact that the internet has made the payday loan more accessible than ever before allowing consumers to shop around and apply for loans in their lunch hour. The application process is simple with no long forms or the need to fax lots of documents before a loan is approved.
The lack of credit checks is another factor of payday loans which has helped to make them popular. No credit checks means people with poor credit histories are still able to access funds when needed, unlike banks who would be more likely to turn them down.
Unfortunately, this has brought a level of criticism about payday loan lenders from those who say this form of lending encourages poorer members of society to get into debt and that the high rates of interest applied means they are unlikely to ever be able to pay the loan back.
For anyone who finds themselves short of money in advance of pay day, a payday loan is a great option for meeting urgent financial commitments such as bills or unforeseen expenses.
Typically these loans cover a period of 14 to 31 days depending on when the borrower is next paid, although some lenders will provide longer periods. This means that for short term borrowing needs, payday loans are good solution, and providing you repay the loan on the agreed date, are not very expensive.
Consumers for payday loans typically only require a few hundred dollars but most banks are unwilling to lend such small sums because they are not profitable to them. Overdrafts are an option if you wanted to borrow just a small amount but can be more expensive than a payday loan even with interest rates around 2500%. Credit cards are another solution but again can be more expensive.
The ease of availability sometimes lures borrowers into a habit of taking these payday loans every other time. This needs to be avoided. Budgeting is extremely important if you often find yourself high and dry. Try to make use of payday loans only when it's a dire emergency. The habit of living one payday loan to other is not good.
Take your time when looking for a payday loan and make sure you read all the terms and conditions of lending. Satisfy yourself that you will be able to repay the money when due and without leaving yourself short for the next month. Try to get a quote from a lender before you formally apply so you can compare deals.
Remember that payday loans are intended for short term borrowing needs and should be used responsibly.