Payday Loans: Expensive Loan Source or Not?
Payday Loans: Expensive Loan Source or Not?
Payday Loans: Expensive Loan Source or Not?
Most of us have difficulty meeting inevitable monthly expenses. A fixed income can't always cover our needs, particularly unexpected needs associated with medical problems, home and car repairs, or even an old refrigerator that doesn't work anymore. Unfortunately, there are few resources to help vulnerable people get through these hard times. Affordable small loans are hard to come by. As a result, many of us end up with very high cost small loans, including payday loans.
Since, we cannot afford to take risk and leave our financial shortage to nothing, we will surely grab the opportunity to take into this payday loans. Is it really expensive? Costly? What if, this is the only thing you think can suggest a temporary yet helpful source to you financial problem?
Let us discuss it right down here.
Many said,that payday loans spread all through out the country to gain maximum profit by lending a specific amount to loaners who get tighten up with financial budget having a high interest rate and cost. However, payday companies vary according to their terms and conditions, the pros and cons of their company and the system they provide for the convenience of the loaners or their customers.
In this article, we will be talking about the both sides, if payday loans are really expensive or not.
For the benefits of everyone, who have gone through loans and to those who are planning to go into it, may this article will help you in distinguishing whether payday loans are costly or not.
Payday loans go by a variety of names, including "deferred presentments," "cash advances," deferred deposits," or "check loans," but they all work in the same way. The customer writes a check to the lender. The amount on the check equals the amount borrowed plus a fee that is either a percentage of the full amount of the check.
The payday loan is for an amount of cash that is less than the amount written on the check. At the end of the agreed time period, the customer must either pay back the full amount of the check which is more than the amount of the loan, allow the check to be cashed, or pay another fee to extend the loan.
I would like to emphasize, that payday loans system vary from one another, this will help us find out the assurance and certainty whether loans are expensive or not.
Why are Payday Loans Expensive?
The difference between the amount of the check and the amount of cash the customer gets in return is interest or a loan fee that the lender is charging. These types of short-term loans are always very expensive. Examine example below;
The High Cost of Payday Loans
You write a check dated in two weeks for$256
You get back today............$200
and charges...........$ 56
The interest rate for a loan of two weeks is 730% on an annual basis.
Compare this 730% interest rate loan to annual interest rates as low as 10-15% that bank, credit unions, and finance companies charge.
Now, is payday loans not expensive? Again payday loans vary.
As a matter of fact payday loans provide extreme source of loans for the consumers to finance their expenses and most their unwanted expenses that urges them to really go into this kind of loans.
Most of the loan companies aim are to provide cash finances to us, consumers, to help us alleviate from our recent status where we experience dilemma and instability as far as money is concerned. Their main focus or their priority are those consumers who have not enough or that much. Extension of help and resources to answer our echoing need of money is the best concern they most attend to.
There are variety of payday loans, they differ from one another. Some are affordable, cheap, yet some are expensive and too much costly.
Now, the point here is, how we consumers are going to identify or distinguish trusted and secured loan company to avoid high rates of our loans.
The choice is really in our hand. It is matter of how we understand the context of payday loans.
We must first thing, consider the limitation of going into several loans. This might lead us to something we will regret later.
The verdict is in your hand. Payday loans are always been there, be it expensive or not, but the great question is, why payday loans, if we got saved our money and establish right budgeting for it?
Still, the answer is in you.
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