There has been a great deal of publicity in recent years surrounding payday loans and their effect not only on the economy but on the people that use them as well.
Not all of that media exposure has been good.
Governmental restrictions on payday loans sent the press into a feeding frenzy, swarming in on the payday loan industry and vilifying lenders without offering them the chance to tell their side of the story.
It’s no wonder many people view payday loans with the same disgust they would a cockroach stuck to the underside of their shoe!
Payday loans aren’t as evil as the media would like you to believe.
With a thorough understanding of the system and how these loans work it’s entirely possible that a payday loan might be exactly the answer you’ve been looking for.
Imagine for a moment that you’re driving home from work and your car breaks down on the side of the road.
It’s the only one you’ve got. You don’t have another lying around in reserve. By the time you’ve phoned the recovery lorry and arranged for repairs, you could owe far more than you have sitting in the bank.
You’ll be able to pay the auto repair shop next payday, but you have no way to get to and from work until then.
Now, what do you do?
It would be nice if you could go up to your employer and ask them for an advance on your next cheque, but unless they’re extremely understanding they’re probably going to laugh.
You could try to borrow money from friends and family, but there’s no guarantee that they’ll have the money available or, if they do, that they’d be willing to loan it to you.
Enter the payday loan.
This is exactly the situation that payday loans were designed to address. All you have to do is take your identification and proof of income to a payday lender.
They’ll write you a cheque for the amount of money you need, you’ll write them a cheque repaying them with an additional fee for borrowing the money. The lender will hold your cheque until payday.
The amount you borrow (plus fees) will never be more than you’ll receive on your next payday, so you’ll never have a problem paying it back.
The problem many people have with the payday loan is that they get caught in a cycle.
They can’t pay the payday loan back on payday without forfeiting their ability to buy food, pay rent or do any of the other things that you need to do with your income.
Since they’ve already written a cheque they have two choices; try and get by with no money until the next payday or take out another payday loan.
They take out the loan, and the cycle continues.
The problem with the payday loan doesn’t usually stem from the loan itself but rather, the financial problem it’s being used to solve.
Used conscientiously, payday loans can be an excellent solution to your short-term income problems.