This is a guest post from regular reader Melissa…
It may seem at times payday loans are sold as a cure-all for everyone. However, these loans are far from a cure-all and are a consumer-lending product that is targeted for a market that has very few other alternatives. The market is for people with little or no credit history, no other sources of lending, and few assets. Most bankers will have a tough time approving lending for people in this category and so payday loans offer people who have this background a chance to obtain short-term loans that are paid back on their next paycheck cycle.
The interest rates on these loans are typically higher than other sources of lending, like credit cards or installment loans. However, they are also higher risk loans for the lender since no credit check is performed. This allows people who have suffered a foreclosure or a bankruptcy to still have options to borrow, even though the rates are higher. If they show a willingness to repay these loans on time, it can be an excellent way to rebuild their credit histories while providing needed funds in the short-term. Without this industry, people who don’t qualify for conventional sources of credit would not have any other way to meet short-term losses in income.
Related Posts -
Hey, Brother, Can You Spare A Dime? There are many ways to secure loans these days, but due to the sub-prime mortgage crisis, banks and other financial institutions have been much tighter on their guidelines to lend. It seems you need an almost perfect credit score these days to get a low interest rate. Now that this...... - Prosper People-to-People Lending Market Survey San Francisco â October 9, 2007 â Prosper (www.prosper.com), Americaâs largest people-to-people lending marketplace, today released its September People-to-People Lending Market Survey. Prosperâs People-to-People Lending Market Survey provides key statistics and a market commentary by Chris Larsen, Chief Executive Officer and Co-Founder of Prosper.  Prosperâs People-to-People Lending Market Survey......
-
Green Note Review /caption] P2P student loans have exploded onto the scene this past year, due in a large part to a lack of availability of traditional loans. There has never been a better time for a p2p site to start offering student loan assistance, and Green Note is one of the newest...... - Propser and the Greatest Economic Crises America has Ever Faced? Prosper just released it monthly survey and it included commentary from CEO Chris Larsen. What do you think, is this the "greatest economic crises America has ever faced"? (For my part there is no doubt it is in my lifetime, but I don't see this getting to the level of......
-
Fynanz Review This year, it has never been more difficult to get a student loan, thanks to new federal regulations. Hundreds of lenders announced that they would no longer be taking part in federal loan programs and schools are struggling to try to offer loans directly to students. This opened up a......
Related Websites -
How to deal with losing your job photo credit: pimpexposure With unemployment at its highest rate in years, many people are finding themselves unable to make ends meet. They have gone from having a steady stream of income to not knowing how they are going to pay their bills. In California, the unemployment rate has reached 10.1%....... -
When a Payday Loan May Actually Help It's no secret that almost every payday loan company has earned a bad reputation for charging extremely high interest rates to consumers. There are instances when it may make sense to obtain a payday loan, however, and if used as intended- you may be surprised to learn that you don't actually spend...... - Shopping for Loans The internet makes it possible and easy to comparison shop for loans. Whether you're looking for a car loan, student loan, mortgage or debt consolidation loan - there are a number of websites that exist to help you compare rates and loan terms. Whenever you need to borrow money, it's......
-
What Do I Need To Know About Short Term Personal Loans? Short term personal loans have been a lifesaver to millions of individuals that need a small amount of money to handle urgent financial responsibilities. These loans are available in a number of different places and knowing what you need to look for in order to get the best short term...... -
What Are My Options For Refinancing A Home Loan With A Low Credit Score? As lenders begin to tighten their hold on their purse strings and restrict lending to fewer and fewer borrowers, it is becoming more difficult for homeowners to obtain loans to refinance their homes. Homeowners with low credit scores or a lot of negative entries on their credit histories will be......
Categories:
SEO, Site Review, Site Statistics
Tags:
2 comments ↓
Far from doing people with bad credit a charitable service, payday loan places are business that often seek to maximize profits on the back of people that have no where else to go. The arguments for payday loan places are similar to the arguments made for loan sharks.
Payday loans places charge up to 400% annual interest on a loan. While they don’t run a credit check, they do require that the person have a job and require a post dated check. So statements that they loan to anyone aren’t accurate.
More telling is that Payday loans places don’t allow you to pay down principal over time. The loan is for two weeks, if after two weeks, you can’t pay only part of it back and lower your interest cost. You have to roll over the whole thing and get charged interest on the whole thing.
If they actually cared about the borrowers, they would change that.
That’s just the legal stuff.On top of that, there are abuses by payday loans places. Plenty of accounts in which they violated collection law or tried to cash a check several times in one day running up huge bounced check fees for the borrowers.
Do anything and everything you can, including simply not paying non essential bills for a month or two before going to a payday loan places. It just makes more financial sense.
There is no question that there are payday lenders out there that abuse the people they lend to and also the system in general. There is a need for payday loans however, as the article said, for people who have no other access to credit.
Leave a Comment