Wednesday, July 3, 2013, AM | 1 Comment
Though they can be secured easily by cash strapped borrowers in times of urgent need for money, payday loans have been considered as dangerous alternatives to normal bank loans. The practice of payday lending has drawn flak from experts, primarily owing to the high rates of interest involved.
However, if looked at closely, it might as well be discovered that the cons of short-term financing are many, but if handled properly they can act as a real helpful source to turn to, in times of financial crisis.
How Do Short-Term Loans Work?
Borrowers generally resort to short-term financing when they have to meet urgent cash needs like paying off a medical bill or else a tuition fee. It doesn’t involve credit checks and a lengthy documentation process and you can apply for them online.
You just have to fill up some simple details about your source of income, bank account etc and if you are approved, the lender will credit the money into your account within 24 hours.
You might give a personal check to the lender that he agrees to hold on till your next payday. You can redeem this check by making the payment (that includes the loan amount borrowed plus the borrowing fee) in cash or else opt for a loan extension if you are not able to repay the money on time.
What Are The Demerits?
One of the major demerits of payday loans no credit check no guarantor is, as already mentioned, the high rate of interest that may even 400 percent at times. Besides this, the entire practice of short-term financing has been criticized owing to the growth of both bogus and greedy lenders.
As most of the payday lenders conduct business online, borrowers are exposed to the threat of falling prey to fake companies. It is a little difficult to identify fraudsters as their websites look absolutely authentic.
The rise of greedy lenders targeting college students is considered to be equally dangerous. Students often need immediate cash owing to which they turn to the payday lenders as they won’t be able to secure loans from traditional creditors, owing to the absence of proper credit history.
These borrowers remain vulnerable to the threat of being caught in an eternal debt trap as they find it difficult to pay up the exorbitant rates of interest, thereby being forced to opt for rollovers.
If tackled with prudence, it is not that difficult to escape the adverse effects of short-term financing. If you are considering the aid of fast cash loans to bail yourself out of a temporary financial problem, then you should first weigh you need properly. Is it that serious that it needs to be fulfilled way before your next payday?
Can you ask your friends or family members to lend you the money in that case? If you think that short-term loan is the only option at hand, consult at least four to five lenders before settling for a choice. Compare the rates thoroughly and settle for the company that offers a little more affordable rates than others.
Check out whether there are hidden fees involved or not. Adopt due measures to ensure that the site you are referring to, for help, is safe and there are no chances of leak of information regarding your personal details.
You can look up for ways of safe payday loan borrowing on the Internet. Once you have taken the loan, make sure that you are paying it back on time- be it by resorting to abstinence or else working over-time.
Sam Payn is a regular industry blogger, few of whose well-researched write-ups have made their way to esteemed websites as well.