There are so many loan options out there. The good thing is that they are given depending on what customers want. However, it is assumed that borrowers are rational and will make the best decision depending on their needs. It is vital to be acquainted with different loan types and knows correctly which one to exploit when in a financial need. No one is immune to the conditions that necessitate borrowing. For instance, when plagued with an emergency medical bill, it is sensible to take an Instant Cash Loan. This is a decision that can save a life. There are so many cases where it may be absolutely necessary to obtain a loan. But which kind of a loan should you turn to in case of emergencies? Obviously, not all loan types of suit emergencies. When dealing with an emergency, it is only vital that you go for a loan in which you can be approved quite easily and receive the cash instantly. Nevertheless, such borrowings can be so expensive and inappropriate options to consider. Throughout this discussion, we are going to look at one type of such emergency loans, payday loans. Specifically, we will be responding to the question – Why Does Anyone Use Payday Lenders? Let us begin with a brief overview of payday loans.
Payday Loans
These are short term loans that are expected to be paid back within the next payday. It is very easy to be approved for these loans. The easy approval and access to funds are what make them quite popular. Many people turn to these loans when faced with emergencies. But still, there many other reasons why individuals opt for them. Unlike traditional lenders, payday lenders do not pay much attention to borrowers’ credit history and score. Proof of income may be sufficient to get you a payday loan. But as they say, it is imperative to give a second thought when a deal appears so sweet. Whenever you want to borrow money online instantly, always take time to weigh all the options that you have.
Payday loans are often perceived as predatory lending. This is because they often predate individuals’ finances. What do we mean here? Well, it is so easy to borrow payday loans than it is to pay them off. These loans have an APR of at least 390%. They are just so expensive and often end up ruining the finances of individuals rather than helping them get out of the money crisis.
I am aware of several friends who took these loans for genuine reasons. Unfortunately, their financial conditions worsened over time. Once the first loan was repaid, most of them felt some sort of inadequacy and ended up renewing their loans. While there is a provision to repay the role over the loan, there are costs associated with that. For instance, you may be required to pay an additional of up to $30 for a loan worth $100 in case you opt for a rollover.
Why Individuals Opt for Payday Lenders
From the preceding, payday loans can detriment the financial status of individuals. Nevertheless, recent statistics show that these loans are increasingly becoming popular. You may want to know why the surge in popularity when it is evident that they are detrimental to the financial health of individuals. Well, here are some of the reasons why individuals prefer payday loans.
Constant financial suffering
No one would ever want to be in financial distress. In the period of unemployment, individuals suffer emotionally and financially. In some cases, individuals scrounge funds together in an attempt to make ends meet. In such a condition, a payday loan might be quite attractive for various reasons. For instance, you can get the funds that you need within a short period. Additionally, you can keep the lifestyle you had before losing your job. A payday loan can help break the feeling of redundancy of financial distress. This is an essential psychological impact that can be so beneficial in your overall well-being. Nevertheless, We are not advocating for payday loans in solving this issue. Remember, we mentioned at the outset that these loans can ruin your financial condition completely. The best way of dealing with this condition is to look for some work to do. Also, you should save money while on employment. If you do this, you will always have some finances to fall back on. Also, aim at reducing your spending in the best way you can to increase your savings.
Debt consolidation
Statistics show that one of the main reasons why individuals use payday loans to cancel out other types of loans they struggle with. This is what we call debt consolidation. The debt might have been taken from another company or just a different source. Usually, people make this decision when they are overwhelmed with debt. It is sensible to take a payday loan in case the interest rates advertised are lower than the rate on the current loan. This decision combines your debt and makes it possible to pay off. This is because you will be required to make just one payment every month.
Holiday loans
Holidays can be so demanding. Giving is an excellent way of letting individuals know you love them. When you are not in a position to gift your individuals, it can be so embarrassing. In this case, individuals prefer taking payday loans to finance holidays. Payday lenders are considered the best options in this regard. Then the loan can be repaid once you receive your income. However, borrowing for holidays amounts to poor financial habits. You don’t want to start the year on a low note because of debt payments once the holidays are over.
Bad credit
Traditional lenders such as banks only lend to individuals with proper credit. Those with bad credit can hardly be approved for loans. In contrast, payday lenders do not focus on borrowers’ credit. In general, bad credit does not make you ineligible for payday loans. Again, it is only good that you work on improving your credit rather than relying on payday loans because of desperation.
Medical expenses
We are always advised to save for emergencies. But in most cases, individuals are caught offside. Still, you may not have saved enough funds to cover medical costs, and if you are not a beneficiary of health insurance, then taking a payday loan might be sensible.
The Bottom Line
There are so many reasons why individuals opt for payday loans. While you may easily be approved for these loans and even receive the funds the next business day if not the same day, it is wise to consider other options. There are several options to borrow money online instantly, you only have to do proper research. You have to compare interest rates charged by different lenders for the same loan amount. But a word of caution, never borrow more than you can afford. Always aim at walking out of debt.
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