Payday Loans have been criticized by many as a bad economic choice. These loans are also called Payday Advance, Loans or Loans. Critics say that interest is very high and that people can be in trouble when they start to borrow money that way. Both of these statements may be true, but this is not always the case. Just like anything else in life, if someone chooses to abuse help or abuse many other options that they usually have is good, things can still stop getting bad!
Let's address some concerns. The first concern is about the high interest rates. It is true that the interest rates on these loans appear astronomical compared to most traditional borrowing rates. But let's take a closer look.
When a person gets a $ 100 salary and it costs them $ 20 to borrow it, many would criticize that this is a rip off and that it's a form of mortgage lending. They consider it unfair for people who may not fully understand the costs of this type of unsecured loan. They can say that Cash Advance Loans are too expensive compared to other loan products or services and that Payday Loans should be avoided.
When your car mechanic fixes your car and orders a part for you, what happens? Let's say that the part costs $ 100 wholesaler to the mechanic and that the suggested selling price of the item is $ 150, which he charges you. Now he only had this part in his possession for a few minutes or possibly hours, but he still benefited twice as much as the Borrower's loan. The mechanic takes a minimal risk that the part fails and he must repair again without charge. The Loan Borrower has taken a much greater risk by lending money to people whom other lenders would turn away.
Think about it for a while. If the restaurant you and your family had dinner in the evening, fresh food ordered yesterday to cook and your meal cost them $ 100 in raw food ingredients, but then your bill came to $ 150 (plus tips!), Why is this exercise looked down on? The restaurant only had hold of the food for a few hours before serving, but they could add 50 kronor of revenue to cover their costs and earn some profit.
In some way, when other types of business provide much more revenue on the products or services they deliver, it seems only as most are considered free companies and are quite acceptable. In reality it is! Our society is due to the fact that goods and services are provided to meet the needs and conditions of the public and everyone knows that there must be some money on each level or nobody would care about it! Essentially, we would like to pay because we have needs that we can not meet on our own!
With the help of this new found perspective, why should unsecured lenders make it free? They have bills to pay and also need to make some money, which is the same as any other form of trade. Because of the higher risk they take, they must also cover their losses. Do you think you pay too little for insurance? Probably not. When insurers hold large losses, they increase their prices to become profitable. It's just a part of the costs we pay, just as it is with short-term loans.
Now, the other thing like Payday Loans is often criticized because it is worried that when someone begins to borrow from their future profits, they may encounter financial problems. If someone needs more money than they do, it's hard to get back to good financial health. When people start using credit to get things they need, they can be in trouble when the bills begin to come.
Hmmm. Does this familiar? If anyone sees the latest modern boots on their way home and it costs only $ 150, are they likely to skip Starbucks one morning a week to save up to buy them? Will they save $ 5 a week and wait 30 weeks to buy the boots with cash after they go out of style? Or will they withdraw their credible credit cards, run into the store and pay out $ 150 plus tax, plus interest in debt!
When you do not want to cook, you go out to eat. But what if your budget included dinner at home? You trust your credit card to pay for dinner. When you have no extra money and you accidentally turn off your smartphone, and the screen goes blank, use your credit card. If you develop a throat infection and need to pay the doctor's salary or your dog needs to see the veterinarian or your car will not pass inspection without new tires or your children need new shoes for school, use your credit card.
In summary, these unsecured loans are not for everyone. But for many hard-working people who need money and can not turn to traditional lenders, a payday loan can be the perfect solution!