Most of us face financial emergencies in our lives. In fact, you will rarely see a person who hasn’t been through a tight phase at least once. It’s entirely possible that you have a lot of assets of your own, but they are all locked away in real estate, bonds or such other financial instruments that cannot be taken out so easily and quickly. And of course, you might not even want to sell off these assets too, as the liquidity crunch is likely to be temporary.
So what do you do when you face a liquidity crisis? Perhaps you need a bit more money than what is there in your bank account. Some of us cut back expenses to make both ends meet. But that is not always possible, particularly when you have to pay a rather large sum of money towards urgent home renovation that cannot be delayed, fixing a problem with the car, or the payment of medical bills. Or maybe you have to visit your dear old aunt overseas who is possibly seeing her last few days because of poor health.
There are those who would approach friends and family for the urgent cash. But many don’t want to do this as this could be very embarrassing. After all, you don’t want to take a favor from anybody, if you can avoid this.
And besides, you could embarrass the ones you approach as well. They don’t want to say “no” to you, but are compelled to deny you the funds because they could themselves face a hard financial situation. In other words, there is simply not enough adequate disposable cash that could be loaned to you. So in the end, your friends and family will try to find all excuses to avoid you. Now, that’s not a happy situation.
So we can say that borrowers ask for payday loans for these 3 reasons.
1. To solve their immediate liquidity crunch.
2. So that they don’t have to cut back expenses by too much, and because sometimes, even living on the basic necessities isn’t going to be enough.
3. So that they don’t have to approach their friends and family for money.
Recent Study Reveals a Surprising Finding
However, a recent study that was carried out by a division of the Pew Charitable Trusts reveals something new. According to their findings, 41% of borrowers are saying that they have to approach friends and family for cash infusion to pay off their first payday loan. So these people have to do what they were trying to avoid in the first place. The report further says that some of these people have even had to pawn their personal stuff, or take second payday loan to repay the original.
Pew Charitable Trusts report says that borrowers are facing a problem because the average American can pay back just $50 each week, but with these loans, they have to repay $400 in a couple of weeks. Sometimes, the debt period is extended, and so, the borrower ends up paying $500 as fees over five months.
Not Everybody Agrees
The Community Financial Services Association of America has contested the findings of this report. They are pointing out one basic shortcoming – lenders get a large deposit of funds on the payday and most people are easily able to pay off the entire loan without any problems whatsoever.
The association is also pointing out that typically the fee charged is anything between $10 and $15 for a loan of $100. So for a $1000 dollar loan, the total fee would come to between $100 and $150 maximum. A payday loan above $1000 is rarely offered, so borrowers don’t have to pay $500 towards fees as reported by Pew Charitable Trusts.
The Community Financial Services Association of America says that small dollar loans are extremely important short-term credit products. This is an important tool for those who need funds urgently to manage a sudden shortfall or pay an unexpected expense. Without these loans, a lot of people would be in serious trouble. It would only bring down the financial health of the country.
However, having said this, it is important to remember here that payday loans should be taken purely to solve sudden emergencies, and not for luxuries. You shouldn’t go on a weekend trip with this money, or buy a new swanky gadget with the funds. Only borrow what you absolutely need for a real emergency, and nothing more, and everything should be all right.
Even the Banks Are Going Into Payday Loans Now
There is no threat to the payday or small dollar loan business. There is no threat to most borrowers who are taking these loans. You might be surprised to know that even the biggest and the most credible banks are getting into these loans now. It is not a direct association though as the banks are not offering these loans to the borrowers directly.
The New York Times has reported that banks such as the Bank of America, Wells Fargo, and JP Morgan Chase are becoming behind-the-scene allies of online payday lenders.
Also, there is increased scrutiny now on the operations of payday and small dollar loan lenders. Federal regulators are monitoring the businesses closely. So the industry has become extremely regulated. Most lenders follow all laws and directives. In fact 100% of our lenders follow the laws of lending in their state – otherwise we don’t work with them. But it’s still advisable to be sure about the company’s credentials before borrowing the cash. If you are seeking a payday loan, always deal with a good company with credibility.
Most borrowers have also revealed that the loan terms are clearly mentioned. There is no ambiguity about this. So that is good news.
Go ahead and take a payday loan from us. There is really nothing to worry about. Why approach your friends or family and face embarrassing situations, when you can get the cash advance easily and quickly?
The best part about our loans is that, you can apply online from the privacy and convenience of your home and get the money deposited directly to your bank account the very next day. Nobody has to know about your financial troubles.
Everything happens really quickly, sometimes in less than 48 hours. That is excellent news because you will surely want the cash quickly in an emergency. And there are no hassles too, as there is no questioning on why you need the funds, no credit checks, and no long standing at queues. And yes in case you are unable to pay just inform your lender one day before the payment is due. They will surly arrange something for you. We are very helpful towards our customers and try our best to give a loan to everyone who applied.
Thank you for visiting our website. Hope we helped you get a loan.