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The economy works on credit. In other words, you need good credit for virtually everything – a student loan for paying the college fees, mortgage loan for the house, a car loan for that new automobile. Good credit will be the make-or-break difference.

How the Credit Score Affects Our Lives

All of us have a credit score, which determines our “creditworthiness”. There are credit rating agencies that evaluate and come out with these scores. It is a three-digit score that is used to determine whether your loan applications are going to be approved or rejected. But creditworthiness can sometimes go even beyond that. For instance, the credit score is used to decide how much you pay towards insurance, whether you can rent that nice apartment, and even whether you will get that job or not. Yes, employers, landlords, and insurers can all access your credit score before deciding.

A good credit score can thus make a huge difference, even if you are not actively seeking a loan at this time. Bad credit will indicate that you are a risky bet. Good credit, on the other hand, is an indicator that your life is on the right track. It’s that important. read more

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There are two clear viewpoints on payday loans. Many individuals are convinced that these short-term loans are the way to go because it helps them stay liquid when they are running a little short of cash. Plus, they can always turn to these cash-advances in an emergency such as the car breaking down, sudden house repairs, or medical bills. There are millions of such people across the United States who is approaching payday loan companies for these short-term cash advances.

Then there are the critics who believe payday loans are a debt trap as a large section of the population are not able to pay back on time. The statistics, though, tell a different story. These loans are not a problem for a large majority of people, as they always pay back on the due date. But having said this, there are always a few individuals who cannot repay the loan on payday, mainly because of financial mismanagement. But that happens with any type of loan, and not just payday.

However, we will still like to work with those who might face problems in repaying the loan in time. So here’s a guide that should help them. read more

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Statistics of the present banking system in the United States will shock most people.

Twenty-seven percent of American homes, which come to one in four, don’t have access to the complete range of banking services. 7 percent of all people in the US are “un-banked”, which means that they do not have access to insured bank accounts, or any banking services. Plus, about 20 percent of homes in the United States, are “under-banked”, which means these people have an account at the bank, but don’t use banking systems for transactions or their credit needs.

Leading Presidential Candidates Raise Financial Inclusion Issues

The issue was raised briefly during the recent Presidential election, with both the leading candidates promising swift action to rectify the situation. But the situation is nothing new. Experts had pointed this out even after the economic turmoil of 2008 and asked the administration to prioritize financial inclusion.

But nothing much has changed, though almost a decade has passed since then. Payday loans or quick cash loans have remained the best bet for a large section of these un-banked or under-banked Americans who need credit. Yes, a few alternatives have been launched from time to time, but nothing has worked. For a large section of the population, payday loans remain the only viable and practical option. read more

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It is important to know the features and benefits of bank loans and payday loans to know the truth.

Payday lending has been receiving bad press over the last few months. Some people are claiming that these loans charge outrageously high interest rates. Further, it has been pointed out that the payday lenders follow predatory practices that can push their consumers back against the wall and send them spiraling down the debt tunnel from where it is difficult to escape. The entire industry of payday lending has faced a lot of criticism on these counts.

Is the industry really this bad? If it was, then why do the millions of Americans still prefer these loans over other credit sources?

Here’s the reality – stack up the costs of payday lending, and compare them with the fees of traditional banks, and you will find a different villain. It appears, the millions of Americans are not wrong, after all.

The Payday Loan Details

Most payday lending agencies offer short-term personal loans where the average cost is between $12 and $22 for each $100 you borrow. In other words, the interest rate is usually between 12% and 22%. The actual loan amount is rarely above $1500 or $2000 max. These are short-term loans where you have to pay it back within two or three weeks, after the next pay check arrives. The money is deducted automatically from the bank account that you have provided while applying, and the account where the lender had deposited the amount. read more

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There is a problem with our banking system and conventional lenders. Sure enough, there is a lot of money in the banks, and there are many individuals and businesses that want to borrow this money for business growth or personal requirements. It might be easier for businesses, but how many individuals, a little short of cash, will get the money they need in an emergency?

It’s like being bullied at school for low grades. You don’t feel good when you are snubbed because you lack something, especially low credit score. This is why so many people in the United States are still outside the banking network.

Many Traditional Lenders Deny Small-Dollar Loans

Most traditional lenders will reject applications for short-term installment or payday loans, irrespective of how many times you visit the bank, or what you say and do to convince them. It simply doesn’t work. Then there are banks that won’t even accept applications for a small-dollar quick-cash loan, because the amount in question is too small for them. They are simply not interested. read more

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According to the findings of a survey, about a third of all students have to depend on payday loans, credit cards, and overdrafts to fund their university education. Many of them were depending solely on cash loans. The Future Finance research discovered that as many as 31 percent of the students have to depend on these sources for covering their university expenses. The study was carried out among 1,000 full-time students.

63 Percent Students Taking Payday Loans Understand Financing Matters

Researchers also discovered, after talking to these students, that more than a quarter did not consider a payday loan to be a kind of debt, because of its short-term nature, and the small amount borrowed. Interestingly, 63 percent of the students who were questioned said they have good knowledge of finance, while the others conceded that their financial understanding could improve.

For instance, many of these students did not know what the Annual Percentage Rate or APR stood for. However, these students were a minority. Most of the researched students had a decent understanding of finance. Payday loan critics have often said that one reason why there is such a huge demand for these loans is because a big section of the population does not understand finance and how to manage money efficiently. That is clearly not the case, as evident with the findings of this research. read more

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Very few people, including the media houses, were betting on the Republican candidate winning the vote. But the election results surprised them all. Donald Trump is now the new president-elect of the United States. Every new president comes in with his own beliefs and policies. So what is he likely to do for the payday loan industry and lending business in general? Let us find out.

Consumer Lending Could See Big Changes

While on the road, Trump had said many times that he is going to cut lending regulation and make it easier for both businesses and the people. This will surely be a big relief for the many payday businesses that offer these short-term loans, and about time too, as many of them have been winding up off late, unable to cope with all the regulations that have been passed in recent times, and the pressures that are often quite unjust.

In the meantime, consumers across the country have been flocking to payday lenders for the quick cash relief they need in an emergency. For instance, last year, people in the state of Alabama took more than 2 million payday loans. It’s an urgent requirement in the Mississippi Delta, and in many other parts of the country as well. So it is clear that there is a need for payday lending and a huge demand for it. read more

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Many professionals, including communists and a notary public in California, and an attorney in the US state of Missouri, are defending payday lending, even as the industry is under threat from the lawmakers in Washington and other critics. The common complaint is that, payday lending leads to a debt trap. However, there are others who are convinced that these small-dollar loans are the only option for a vast majority of people in the United States, particularly those who have little savings.

The Case in California

A prominent notary public in South Carolina has questioned why every time something actually works for the little guy, there are government bureaucrats who will try to take it away? Cranford T. Rigell wonders if the government understands that there are people out there with real needs, and sometimes these people require help.

He was referring to the payday loan industry, which is increasingly under threat because of the ever increasing government legislation and stricter regulations. At least one columnist in a major California magazine has supported Cranford. read more

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Let us be frank. It’s always best to have an emergency fund for all those times when you may need some extra cash suddenly. Life gives us unexpected moments. Even small amounts such as $500 or $1000 could help us immensely. But the reality is, very few people can maintain an emergency fund, because they are busy meeting their everyday expenses, and saving for the future.

So what do you do if you suddenly have to make a payment, but don’t have the resources? You can always take a payday loan or a cash advance loan. These short-term loans will give you immediate respite. You pay back only after the next payday. These loans are easy, quick and convenient.

But before applying for your payday loan, do consider all your options.

Consider the following points before taking your cash advance loan.

1. Are you ready to take financial responsibility?

When you are taking a loan, whether it is for the short or long-term, you are making a financial commitment to pay it back. Are you ready for this? Up to this point, you may have led your life in a certain way where there was no commitment to make big payments apart from your utility bills. But now, once you take the loan, you will have a creditor in your life that needs to be paid back. So you might have to make a few curtailments to save money. Cut the coat according to the size. read more

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The payday loan industry has often been blamed for not looking at the best interests of their customers. Reality check – nothing could be further from the truth. There really is no alternative to these short-term loans, though in recent times, a few alternative plans have come up all over the United States. Most of them have however failed miserably. In contrast, the payday loan business remains a billion dollar industry, serving millions of customers throughout the country.

Here’s proof that there can be no alternative to payday loans

LendUp, a firm from the United States that was offering an alternative to payday lending has been slapped a fine of $6.3 billion after it was discovered that the business was violating several laws between the years 2012 and 2014. It includes a fine of $1.8 million by the CFPB or the Consumer Financial Protection Bureau as well. The California Department of Business Oversight has also imposed a fine of $100,000.

The Accusations Against LendUp and Why Payday Lenders Are Better: read more

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