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:
The Promised Friendlier Terms Were Not Friendly At All.
An online lending agency, LendUp was promising friendlier terms than the businesses that offer payday loans. But in the end, it ended up misleading their customers, forcing them, and even cheating. Payday loan businesses never do such a thing.
Because of all the violations, LendUp will now have to issue a refund to issue a refund to a staggering 50,000 borrowers as a part of the settlement. Plus, there are other penalties as well that they will have to cough up.
Payday Loan is the Simplest and the Easiest Form of Cash Advance
There cannot be anything simpler or more efficient than a payday loan. Consider this:
Payday Loan Alternatives
The reality is that, there is almost no practical alternative to a payday loan.
Loans from banks and conventional agencies don’t work out because the application and lending process it too long. It can sometimes take weeks, which many cannot afford. You will also have to put up collateral, which many people are not able to. They will also carry out a credit check. Your application can, and probably will be rejected, if you have poor or even an average credit score.
The other alternatives to generate extra cash include borrowing from retirement funds (which many people don’t have anyway), loaning from credit cards (extremely costly), a personal loan (again very costly), renting out a room (not possible if you are living in a small home), moonlighting (impractical for a lot of people), cutting the insurance premium (very risky and not advisable), borrowing from life insurance (you will receive less on maturity and the impact is long-term), and selling your personal assets (very demoralizing).
A few financial plans have also been launched as an alternative to payday loans in the belief that we ought to do away with these short-term cash advance plans. In recent times, a lot of regulations have also been passed against these loans, and restrictions have also been imposed. But what has been the result of all this?
The banks and other conventional lending agencies haven’t been come out with an alternative that works. See how the LendUp initiative failed. In fact, there is not a single plan that has managed to become as popular as payday loans. Why? That is because customers don’t find them practical or useful. They cannot match the advantages that payday loan companies offer. Let customers have the last word in this. Let the market decide what it wants. Isn’t that what capitalism is all about?
Indeed, there are plenty of good reasons why payday loans have become so popular and have served millions of people in the United States.
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