Today’s financial situation in the world can be described as rather difficult and questionable, where people are trying to make ends meet and to balance their budget daily. Poverty and loss of jobs have become major problems and people are trying to earn only for basic essentials. They have been forced to take all sort of loans in order to survive, banks usually take those kinds of situation into their advantage and impose them high interest rates. The real question here, are we becoming the slaves of the bank, trying to return loans which force us into a greater debt?
What a payday loan represents?
This loan is made for short usage, which means you can borrow it over a short amount of time. Companies for payday loans usually use typical commercials to advertise them as means to fund shot notice purchases, at the end of the month, before pay check arrives, when everyone is short for the money. Unlike traditional loans that you will be paying off for years these loans are arranged over days and they are used as a means to overcome a gap between two salaries.
How much are you allowed to borrow?
Mostly, these loans go up to 2000 dollars, but some companies will limit the amount of the first loan. The period of time in which you are obligated to return the money is between few days up to a few month and these conditions vary from lender to lender. Some of them will offer you five days, while others five months. What’s important to mention about these loans is that lender will calculate you interest on daily level.
How big the interests are?
Let’s just say they are pretty big. You lend a loan in amount of $200, that you are obligate to return in 14 days, when that term expires, you will owe to a lender approximately $234. If in your account the lender doesn’t finds required mean, he will charge you additional $20 for late payment. If you seek from a lender to extend that period for additional 14 days and that someone repays the loan instead of you, you will own $275. Even if after that you don’t find the means to repay a loan, he will grow up to a $368.
Why are they so questionable?
There are lot of campaigns now days against these companies that offer payday loans. Because the interests are usually quickly add up. The lenders target borrowers who are extremely vulnerable, without checking their salary balance, before they allow them to use a loan. After the borrower uses the loan that he isn’t able to repay in designed time. Not many of lenders are happy to help him out and to enable him decent conditions to return the money.
Is the criticism justified?
We are required to mention that these companies made number of omissions, regarding a payday loans and some of the researches may contribute to that. Mainly because borrower wasn’t obligated to provide documents, whether they are in position to seek and return a loan. Another omission is that interest rates aren’t been enough transparent, so the borrower can’t really know want to expect.