Have you felt that the money you earn is not enough and you need more in life this month and just this month due to some extra expenses and don’t want to ask your parents for the money, because you are an adult and don’t want your parents to think that you are not capable enough to settle down by yourself? Well you have one option that will not embarrass and will not be as slow as the bank, it’s called payday loans and you find many finance companies providing you with payday loans as per your need.
What are payday loans right? Well payday loans are provided by a lender to someone who comparatively needs a small amount of loan in a very short period of time and will also return it back within a limited time frame. And the catch to payday loans is that the rate of interest is very high and the time period is very short but this option lets you borrow money within no time and most lenders don’t even ask for any details, you just apply for a loan and fill your bank details and the loan is transferred to your account.
After a fixed period the lender will go to the same account to withdraw his money back without the extra bonuses. Many a time the person who wants to borrow approaches the lender and asks for funds and the lender will ask for a post dated check with the lent amount and the decided interest and after the fixed time period if the customer doesn’t return the required fund then the lender cashes in the check and takes his money. If the money bounces then the borrower will have to again pay the decided amount and some added fine for not being able to meet the time period.
Studies are shown that most of the pay day loans are taken for daily use and not for big payments but rather for basic payments like house rent or if you have to buy something that is necessary or when the expenditure of the month was too much. Payday loans are mostly accessed by the middle class people who find their salary for a particular too less for their livelihood. Payday plays to the need of the people and makes them pay high interest sometimes as much as 1/3rd of the loaned amount.
Previously we had thought that only companies in America provide payday loans but now we have got to know that Pay day loans are even provided across European countries and one such company that provides Payday loans is called Pikavippi. Pikavippi is a payday loan company from Finland which helps the people in financial stress but the loans are not huge and are very minute like from $100 to $1000. With the interest rates being as high as 30% people normally are not that sure about taking a loan but the interest value decreases as the loan amount increases but the least interest amount that I have heard of is 20%. The process is exactly the same as we have mentioned before and you can apply for the loan both online and offline.
Always remember that taking payday loans are a huge loss to you due to high interest rates and don’t take a payday loan unless it is your last option. Always approach your family and friends first, maybe even your colleagues where you don’t have to go through such a big loss. Always remember that if you can’t pay the complete loan never extend the time no matter how much they ask you to because on the long run you people will have to pay less, no matter how less it seems now.
So it should be your last option and even if you chose this method then paying back the loan should always come first on your to do list.
Payday loans has received a lot of criticism from people around the world as it is said to reach out to the vulnerable. Studies have shown that payday loans are chosen by people who don’t have access to regular debit banking and are very poor. Refugees and people who just moved to a country also go for payday loans as they don’t have any other options. So many organizations have found it be something that makes bad use of peoples’ needs and also their lack of knowledge.
This method is said to have only favoured the lenders with average interest rates of around 36%. This method decreases the resources of the people as their money goes in paying the absurdly high interest rates. Their method of dealing with defaulters have also come under scrutiny as, if the post dated check bounces, the lender sues the borrower and then causes to more loss. These companies also use a lot of methods to pressurize the borrower in giving the money on time.
Their method of advertisement has also caused some criticism to be aimed towards then now. They have advertised using false information on facebook and google, though google have banned any payday loan company adds due to their high interest rates. Many companies have even opened under the fake names of famous organizations and were fooling people to use their company by increasing the brand value of their own.
A study in 2009 showed that payday loans were of great help to people in natural disaster areas and that people fared better in these areas with payday loan companies than the areas that didn’t have payday loans. Payday loan options have also shown that people in those certain areas were less addicted to drugs and alcohol.
Payday loans haven’t bankrupted anyone till now according to studies and instead help in household welfare.
Payday loans are available in many countries like Canada, Australia and U.K. and it has been said that it has a positive effect on the economy of the country. In Canada payday loan rules are governed by individual states and most states have passed legislations about it. In Ontario the interest rates can be a maximum of 14.299% of the effective annual rate. In U.K. there are about 50,000 credit companies and about 200 of them are payday loan companies. The amount of payday loans had increased 4 times of that in 2009 to 2006 and it has a huge market in the U.K. now. There are about 1.2 million people taking payday loans every year with the amount rising to 1.2 billion. In Australia until 2009 all credits were done by the state governments but after that payday loan companies have entered the market and they are treated like any other loan company.