Payday loans... useful?

DavidBibby · #1 (**permalink**) 08-19-2010, 04:43 PM

There's been a lot of discussion lately about payday loans, and the payday loan industry itself.

In a perfect world.. these types of loans would not exist.. because everyone would save for emergencies, pay their bills on time, go to work, provide for their families, and contribute and give back to the community and the world.

But that's not reality. The reality is that there are people who have bad credit.. don't save.. and in general just spend their money on whatever and find themselves UNPREPARED when they have an emergency.

Let's suppose that I have bad credit, so bad that my accounts are closed. I'm about to get paid next Friday, but my electric just got turned off TODAY. The bank is not going to lend me money to get my electric turned back on...that much is certain!

So who can I turn to? Well.. down the street is a payday loan place. So I go in, fill out a little paper work, write a post-dated check (or whatever they need me to do).. and I have some cash. I'll pay the fee of $40 to get the $300 I need today to get this emergency covered.

Now was that very smart of me? If my choices were a) Pay $40 and get my electric back on now or b) wait till payday and have no heat or A/C for me and my family

Between those choices.. I made the smart one.

Yes.. if there were better choices available.. I'd have used them. Yes.. the rates and the fee's are HIGH. Yes.. I could get trapped in a cycle of having to go week after week paying fees until I have nothing left.

None of that is the Payday loan company's fault. Do they have to charge so much? Yes they do.. if a person comes in and uses them about once a year.. that's about $40 they made off that person BEFORE EXPENSES. Credit Card companies will get a LOT more than that from the same person year after year.

If someone uses their services over and over again.. it's still not the Payday loan company's fault. They are there to make a profit. A person should therefore educate themselves and correct their circumstances to the point where they don't NEED Payday loans.. It is also my wish that people educate themselves and correct their circumstances to the point where they don't need CREDIT either, but that's another thread.

So in short. Payday loan companies offer a much NEEDED service for some.. but the price is too much to pay for others.. most people should stay away because there are better available options.

Without the Payday loan companies... Someone stuck and in need of cash would have to resort to Joe "Loan Shark" Guy who will break their legs if they don't pay.

Your thoughts?

Alton Dawsey · #2 (**permalink**) 08-21-2010, 11:13 PM

Would I personally use a payday loan? Never.

Do I believe there is a need for the business. Yes.

Everyone complains about the high interest rates they charge; however, the people who use them are such high risk that the companies have to protect themselves.

Besides would you loan these people money? I know I wouldn't.

Regulations have been created to "protect" users; however, all these new rules are doing in tightening the already tight credit market. This means there's less money availiable to high risk borrowers.

As a result, most of the borrowers will now turn to the loan sharks that you are referring to.

ashleywatson · #3 (**permalink**) 08-26-2010, 08:59 AM

Pay day loan are very much popular among these days because they provide you the fast money and they have least formalities , there is no faxing of documentation ,easily apply through online, no need to wait for week or month. Fast lone approve your document within a day. For this you just need to have permanent job and age above 18 years.

PHPMB · #4 (**permalink**) 08-27-2010, 01:14 AM

Payday loans are a neccesary evil in today's credit market. Not only do they do payday loans, but they also cash checks for those without a bank account and provide free money orders in most stores. With banks making it harder for people with bad credit to establish a bank account, then charge them a bunch of hidden fees for overdraft protection and such, the fees you pay for some of the same services may be higher at a payday loan shop, but at least they let you know about them all.
Don't get me wrong, they are HUGE money making machines, but they are needed. do not suggest using their service for anything other than a very last ditch option. If you find yourself their more than once in your life, you might want to look at yourself and ask what is it about me that keeps bringing me here.

jenniferaura · #5 (**permalink**) 08-27-2010, 06:32 AM

Thanks for sharing good information about payday loan.

alfredjony · #6 (**permalink**) 09-05-2010, 03:53 AM

for some people payday loan helps a lot especially if you do not have used issued any other debt instrument. but one should not made it a habbit

paydayloans · #7 (**permalink**) 09-22-2010, 04:05 AM

Hi,

Payday loans are short-term loans and ideal for those who needs money quickly. These loans are ideal for those who have bad credit history. People use these payday loans for emergency bills, medical treatment and for online shopping also. It reduces overhead, allows to get rid of hassles and saves both time and money.

Thanks

annasearchnews · #8 (**permalink**) 09-24-2010, 12:48 PM

Hi, I've also read a lot of news around payday loans, and I think the problem is that people are using them for the wrong reasons - they are simply just a means for something you cannot afford one month and not for massive debt.

What do you all think about credit cards - I've been reading also that they're becoming increasingly hard to get hold of, especially if you do not already have one with a certain bank!

DavidBibby · #9 (**permalink**) 09-24-2010, 02:20 PM

Credit Cards are still incredibly EASY to get. However.. if for some reason you can't get one, you're probably better off.

Payday loans will give you money fast... but you're PAYING for that service. You still have to work and earn the money to back them back and you still have to work and earn the money to pay for their fee's.

In the long run, using credit cards and/or payday loans is NOT a smart thing to do.

swaxx · #10 (**permalink**) 11-05-2010, 08:30 AM

Payday loans are very useful one for middle man,...

tally · #11 (**permalink**) 11-05-2010, 10:18 PM

People who are facing eviction might be compelled to take extreme measures, but otherwise it is best to stay away.

hellknightsc · #12 (**permalink**) 11-29-2010, 10:56 PM

Payday loans definately hold their place in finance, but only in some situations. Used intelligently, they are lifesavers. For example, imagine being 2-3 months behind on your car payment and being threatened with a repossession. If you don't have all back payments, many banks won't further work with you and won't hesitate to take your car. Payday loans, although expensive, can save your tail in a situation like this... sure financially you spend more money in the short term for taking a payday loan, but it'll buy you more time to recoup the money for the car loan and save a lot of credit points and headaches!

Most people unfortunately don't research the ins-and-outs of payday loans to make a well thought out decision before taking the loan, although everyone should take the time and think it through!

ploans · #13 (**permalink**) 12-21-2010, 10:56 PM

Quote:

Originally Posted by Alton Dawsey

Would I personally use a payday loan? Never.

Do I believe there is a need for the business. Yes.

exactly...its useful as far as its not being ones habit...take it wen you badly need but pay it as soon as possible!

Tom Dawson · #14 (**permalink**) 12-30-2010, 01:27 PM

These things have really taken off in the UK. Although they have an enormous APr. that is relatively irrelevant as they are only meant to be short term loans - you know what you are goingto repay against what you borrow anyway, so why the big fuss about huge APR's I do not know. Considering the relative APR if you go overdrawn at the bank without authorisitation (43,000% at one bank), Payday loans are ridiculously cheap!

thegreattriscuit · #15 (**permalink**) 01-05-2011, 07:46 PM

Like any other financial instrument, good for certain situations. The problem, however, is that their ease and convenience. It enables people to quick-fix a symptom (i'm out of money), instead of identify and tackle the root-cause (I spend irresponsibly, and have terrible priorities).

Again, for the person who has, legitimately, bourne the brunt of a string of unfortunate circumstances, then hey... do what you have to do. But unfortunately most people who consider themselves to be the victim of circumstance consistently make decisions that prolong and exagerate the problems in their life.

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