We’ve all heard of them, seen them being advertised, and you may even know someone who has one. But why are payday loans a popular financial solution? Well there’s a variety of reasons why anyone would need to take out a loan, but whatever the reason, it’s only meant as a short term financial solution.
This is primarily because of the high interest rates that are applied to them. These rates have received a fair amount of negative press in recent months and years; however what they don’t tell you is the high interest rates prevent customers from borrowing a lot of money over a long period of time. If a customer has a regular income, and they are requesting a small amount which they will be able to pay back with their next pay check, then payday loans are proving to be a better solution than becoming overdrawn and facing bank charges.
Now the reason payday loans are a popular short term financial solution is firstly down to the speed at which you can receive one. Whilst the timing will vary between the various lenders, the whole process can be done within an hour, it’s that quick!
After you have filled in and sent your application form (which usually takes around 5 minutes), it must be approved before you receive any cash. This means payday loan companies check that the information you have supplied is correct, therefore, if you need the money urgently it is best to make sure you have filled in the application form properly and in full. From here, depending on when you have requested the money for, some lenders can get the money into your account within minutes. It must be noted that additional charges may be applied if you request the money urgently.
Secondly, the reason payday loans are popular is because repayment is incredibly easy. When you apply for a loan, you specify the repayment date, usually around the time you get paid. The lender then takes your account details and debits the amount agreed after you have been paid. There is the option to defer payment if you are having problems paying the loan back, although you will usually incur new charges for every month the loan is due; the amount of which varies between lenders. But generally it is a swift, automated service that requires no further input from the borrower.
Probably the most common reason why payday loans are popular is the peace of mind they bring. The overriding motive for the majority of applicants is simply that they are looking for a short term financial solution to their struggles. This could be for a variety of reasons, for example paying bank charges, emergency bills and emergency repairs; any reason where it would prove to be more expensive if you didn’t take out a short term loan.
Payday loans provide the customer with more than just cash in the bank to pay those bank charges or pay for that burst pipe. Payday loans provide the customer with a peace of mind, safe in the knowledge that their financial struggles have been taken care of. So, if you find yourself needing to borrow a small amount of money quickly, then payday loans are becoming a very popular financial solution