After all , be careful not wrong . Well , it is not that simple . The fact that the traditional bank and credit agencies do not approve loans easily again allowed short-term lenders to develop . Since the invention of capitalism , one of the basic laws applied borrow : Short loans have greater interest . In the case of payday loans or loans in a few months , great interest , at least in the opinion of some . Like the average American has no other option to get the money for everyday expenses , short-term loans with large interest remains only viable solution .
Are the interests of short-term loans are so high ?
The average loan APR is 350 % faster . This means that you will have to pay $ 3,500 per year if you borrow $ 1000 through payday loans for one year . This is a rough estimate , and when people think about payday loans , it should not be thinking about it in terms of APR . You can not take a quick loan for a year , so why would you think about how much money you need to pay in twelve months ? When people think about a payday loan , he must think about what debts can be covered with the money . If the loan is profitable , there is no reason for you not to take it .
There are short term loans that are cheaper ?
You can find companies that offer these loans at 300 % interest per year , but not less . It is not possible to create this type of product with little interest , for several reasons :
- Payday lenders are looking for high returns . As long as people are interested about the cost of borrowing money , they do not need to apply a smaller tax . Only the government can impose some restrictions , but the authorities prefer to cover short-term credit institutions rather than regulate them
High – risk -related . Loans approved quickly , in a short verification basis . As the company has only a limited number of details about the client , there is the possibility that client to ” disappear ” . When you apply for a loan at the bank , you have to give them a lot of documents , including details about family and friends . The Bank has a wide range of possibilities to get money back if you are not able to pay , while the institution payday loans you can only record with the credit bureaus . High risk means high interest in the financial world , and this is why payday loans are more expensive than bank credit .
- Loans approved in the short term . Payday loan companies can only have an advantage if high interest for credit facilities it offers. Even if the company completely based online , there are no taxes to be paid , the employees and the cost of running . They will only be discussed if the payday loan companies impose high interest
Is this the future of the lending industry ?
Even if the government and other institutions warn consumers about the risks associated with the loan , they will surely succeed in the future . United States imposed rules for companies that want to offer payday loans in those areas , and it seems like the market is more stable . Many people debate about interdicting loans for good , but it is not possible , because these activities are not illegal . As long as we do not ban just because cola contains sugar , we do not prohibit payday loans simply because they are expensive .
The problem is that people take this kind of loan when they do not really need it . Payday loan is useful when the cost of not having money higher . Maybe you need to fix your car , because the only method for you to get to work everyday . If the alternative to take a taxi , borrow money till payday you to fix your own car is a better way to solve this problem . If your child needs a new phone because the old worn out , you do not consider this as an excuse to take a payday loan .
Payday loan industry will continue to exist . Even if the laws and regulations that will be enforced , reduce people’s access to credit facilities , the industry is growing . That’s not a bad thing , especially since the client companies will learn how these systems work . If you want to take out a payday loan , it is a good idea to compare all of the options you have , to determine whether it is appropriate to take out a loan or not , and most importantly , to think if you can afford to pay back . Site comparison of the resources of this type , as here , you will find purpose and document reviews of all payday loans are available in your country .