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Archive for the ‘Payday & Emergency Loans’ Category

More popular than ever and with no end in site, payday loans have become the loan of choice for many Americans.

Payday loans are short-term loans, intended to be used for critical emergencies when no other immediate lending sources are available. Typically, those applying for payday loans have histories of poor or less-than-average credit, making it difficult or impossible to secure other, immediate financing. To that extent, payday loan companies provide a valuable service to those who truly need them; offering immediate financing to a certain segment of the population that otherwise would have no options available.

The Payday Loan Debate

There has been much debate concerning the ethics and practices of payday loan companies, both in the public and private sector. On one hand, the opponents of payday lending cite high interest rates, hard-lined collection methods, and the slippery slope of long-term payment arrangements that lead to large (sometimes huge) final payoff amounts for otherwise relatively small loan amounts.

Payday lenders and other proponents of payday lending also have valid arguments to support their claims that payday loans provide valuable, important services to a particular sector of the economy who otherwise would have no one to turn to in the event of acute, dire economic needs. Payday lenders persuasively argue that high interest rates are needed to offset the high risk that they assume when providing unsecured loans to with the worst credit histories. Lenders also point out that payday loans “level the playing field” to a degree, because traditional lending unfairly excludes those who often need the least amount of money the most.

According to their website, “the Community Financial Services Association of America (CFSA) was established to ensure consumer confidence in, and long-term success of, the payday advance industry.” They go on to state that their mission is to “promote legislation and regulation that provides payday advance customers with substantive consumer protections while preserving their access to short-term credit options, and encourage responsible industry practices by requiring.” Since 1999, CFSA has consistently demonstrated a lasting commitment to help influence responsible legislation by working with policymakers in state and federal legislatures.

There are many myths surrounding payday lending. Honestly, the realities of payday lending are not nearly as sensational or as exciting as myths, legends and propaganda put forward by ardent opponents of the lending practice. Certainly, horror stories do exist but only to the same extent as other industries aimed at the nation’s lower wage earners (such as used car sales, high interest rate credit cards and pre-paid credit cards).

At the end of the day, the debate is unlikely to end. More and more states are passing stricter laws to regulate the use of payday loans and the practices and limits of payday lenders. Federal lawmakers have openly expressed their views as well, on both sides of the issue. For the users of payday loans, it’s clearly a love-hate relationship, and the decision is ultimately theirs. For the rest of us on the sidelines, however, perhaps we should simply refrain from making a judgment until the day comes wherein our need overrides our logic. Only then will we have a clear view of the ethics involved.

Over the past few years, banks and building societies have tightened their lending policies to such an extent that there are virtually no unsecured loans available at the moment. Consumers have therefore looked for other unsecured borrowing and consequently we now have record levels of credit card debt.

Despite the base rate of interest remaining at an all time of low of 5%, credit card companies are slowly increasing interest rates; with new rules being imposed on the industry, aimed at giving consumers a better deal, the chances are interest rates will continue upwards. Basically if consumers are getting a better deal, it means the credit card companies will make less money than they would like and therefore look to make up the difference through an increase in interest rates.

However, there is one other area of unsecured lending, which has grown massively in the last 3 years and which is getting a lot of press – both good and bad. This other area is Payday Lending.

A report by the Consumer Focus watchdog group, claims that the number of people taking out Payday Loans has increased by 400 per cent over the last 4 years. It is estimated that £1.2 billion is borrowed each year now, with 1.2 million people taking an average of 3.5 loans per year, with each loan approximately £300. This is a staggering growth, particularly when interest rates on this type of borrowing range between 2 and 5000 per cent.

Not surprisingly, with interest rates at such a high level, a large number of people believe this is nothing more than legalised loan sharking; it is claimed the lenders pray on the most vulnerable people of society.

So what is Payday Lending exactly and why would anybody agree to such a high interest rate?

Payday lending is aimed at people who require a small loan of between £100 and £1200 and who want this money immediately.

Applications are made online mostly – although there are some “bricks and mortar” companies, the bulk of transactions are conducted on the internet.

In some cases there is no credit check carried out, which can be a major attraction of course. With applications where there is a credit check made, the lenders may well still lend even if the credit check shows a poor credit history e.g. somebody with a County Court Judgement may still be able to borrow, when other lenders would refuse credit.

When applying, the consumer gives the lender their bank and debit card details and also says on what day they get paid. If accepted the money is transferred into their account within a couple of hours.

They agree that the lender can take the money (plus fee) direct from their account when funds are available e.g. when they have just been paid -hence the name “Payday Loan”. In theory this is a nice and simple transaction with both sides getting what they need.

The interest rates are high for two reasons. The first is that the people who borrow money in this way are by definition high risk. This means that the default rate (people who do not repay the loan) is much higher, and therefore the risk to the lender is high. To cover this risk they charge a higher interest rate.

The second reason is that because the loan is due to be repaid over a short period of time (1-30 days), and the interest rate is calculated on an annual basis it makes it look artificially high. Basically the APR quoted assumes you would be paying the same amount of interest every day for a year when in actual fact you should only be paying it for a maximum of 30 days.

To put this into perspective, an unauthorised overdraft fee with Lloyds TSB, based on somebody going £200 overdrawn for 10 days would cost the consumer £85.95. Using the APR formula, applied to Payday lending, this equates to an APR of 46, 450 869 per cent – yes that is 46 million per cent!

Of course with Payday lending the same as with any other type of borrowing, the fees increase if you do not make the payments you agree to when you initially borrow the money.

The Payday Lending industry has not helped itself here with some rogue lenders severely increasing late payment fees and then acting unscrupulously in pursuing the debt. These cases have been well publicised and along with the misunderstanding over interest rates have helped tarnish the reputation of the industry, although as the growth in lending demonstrates they have not really put consumers off.

So are Payday Loans our friend, with a place in society along with all other forms of lending, or are they our enemy and to be avoided at all cost?

Well the answer is yes and no!

Payday loans can be a useful way of resolving an immediate cash crisis, if you have no other access to credit. For example, an unexpected bill or emergency which requires immediate cash e.g. an urgent car repair.

However, if you find that you need a Payday Loan every month or so then this indicates a more serious financial issue and you should take a close look at your outgoings. If need be, sit down with a debt management professional and work out the best solution for you, which does not require constant borrowing.

The bottom line is that like any form of borrowing the onus is on the consumer to treat a Payday Loan responsibly. Never borrow money unless you know exactly how much you will have to repay and are confident you can meet the repayment plan. If you follow this principle and find yourself short one month then a Payday Loan can be a fast simple solution.

Mistakes are a common factor of life. Without mistakes we wouldn’t be able to improve ourselves. Many believe that great success derives from a previous mistake. Isn’t it important that you and your family receive the second chance you deserve?

Many Payday Loan providers believe that you deserve a second chance at a short-term loan. A chance to prove to yourself, and others, that you can make the right financial decisions and improve your quality of living. A chance to persevere and efficiently manage your finances from home. Second Chance Payday Loans were designed with you mind!

What is a Payday Loan?
A Payday Loan is a fiscal sum awarded to you by a respected lender between paychecks. They are typically cashed in sums ranging from $100 to $1500. Be sure to remember that Payday Loans are of a short-term nature. With that in mind, they are to be repaid upon the receipt of your next paycheck.

Unexpected expenses and emergency situations are harsh realities that thousands of hard-working adults must deal with each day. If you have bad credit or no credit a long-term loan may be out of the question. That being said, if you need short-term financial aid a Payday Loan is on your side. The fiscal sum provided to you will not only reduce financial stress now, but in the future as well.

Is it possible to get a Second Chance on a Payday Loan?
A Payday Loan is a fiscal sum awarded to you between paychecks. Remember, providers are looking to provide you with a second chance at successful financial management. With a Payday Loan you also reduce the stress and hassle of filing several documents! It’s important to remember that most companies do not take credit checks, so applying to multiple companies will not negatively affect your credit score! For a great list of no credit check payday loans, visit a payday loan review website.

Where can I apply for a loan?
You can now find hundreds of Second Chance providers online! That’s right, you don’t have to leave the convenience of your own home to take out your short-term loan. With a few clicks of the mouse, you could be filling out your online application. Said application should take no more than ten to fifteen minutes if you are prepared. Be sure to equip yourself with your Social Security Number, Driver’s License and employment background before beginning your application.

How and when do I repay my Payday Loan?
Although you are not required to post collateral, you are required to repay your loan on time. By taking out a Second Chance Payday Loan you are agreeing to repay your short-term loan upon the receipt of your next paycheck. It is important to borrow responsibly; don’t borrow more than you can afford to return on payday.

Upon completing your online application you will be presented with a number of repayment options. Be sure to carefully consider each option and make a selection that is right for you. You should look to select a quick and simple repayment option, you don’t want to get bogged down with complex details.

Don’t you deserve a second chance? Are you ready to take responsibility for your family’s financial management? Isn’t it time you make a change? Stop wasting time and do something that could change the rest of your life.

You’ve taken the first step, you have the knowledge and wisdom you need. Now it’s time you take action and put your first foot forward. Do what’s right for you and your family, make the intelligent move and obtain your Payday Loan today!

“By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.”
~ Confucius