Thanks a lot for that good article which is based upon payday loan, and I'm 10% agree with you that the interest ratio is very high and most of the people are unable to pay him back with their interest.
Generally, payday personal loans are being used for everything from buying new Audio-system to paying for basic necessary needs such as groceries and medicines. Since there are no restrictions on the uses of the money loaned, borrowers really can use the money for anything.
What Is Payday Personal Loans? A payday loan is a type of very controversial short-term cash loan for anywhere from $100 to usually no more than $500. It can be called fast cash loans or instant cash loans or cash advance. Let's say you're running short on cash, but you won't get paid for another few days. You want to borrow $200, so you write a personal check for $230 to cover the loan plus the fee to borrow the money. The payday loan provider agrees to hold the check until your next payday. On the very payday, you can pay off the check with cash, allow the payday lender to deposit it, or write another personal check to cover the amount of the original check plus a new loan fee.
Difference Between Payday Loans And Normal Personal Loans Payday loans are very short-term loans, so short, in fact, that most financial institutions don't offer similar products.
Second, the charges or interest that you pay on a payday loan is extremely high. Reports (from reliable resources) say that payday lenders charge anywhere from 416% to 988% interest for a $100, 14-day loan and that the national average annual percentage rate (APR) charged is 474%. Regardless of this situation, the payday loan industry is growing by leaps and bounds across the country. The Community Financial Services Association of America, a trade group for payday lenders, estimates that as many as 25,000 new payday lender shops will open up in the U.S. over the next six to eight years.
Disadvantages of Payday Personal Loans
* Interest is so high. * Many people who tap the fast cash loans market dig themselves deeper and deeper into a financial hole from which there may be no easy escape. * When their loan comes due, very often they do not have the money to make good on the debt. When this happens, the payday provider allows the customer to extend the loan - for an additional fee, of course - until the next payday. Payday lenders don't care if this goes on indefinitely. Advantages of Payday Personal Loans * The main benefit of a payday loan is that you get instant money when you need it. While the interest rates on payday loans are insanely high, supporters of payday loans argue that they provide quick loans for people who are employed but are experiencing a cash flow crunch for one reason or another. * Those who need an instant cash loan and who can pay back the money borrowed plus the fee within a few weeks, a payday loan can be a viable, albeit extremely expensive, alternative. * A payday loan can more than pay for itself if it helps you avoid two or three bounced check fees. The key is paying the loan back when it comes due - or sooner if you can. Do not continue to roll the loan, as the fees will mount to levels that you will be unable to pay.