Published on September 24th, 2019 | by Sunit Nandi


Why Payday Loans Aren’t Really That Bad

Payday lenders get a lot of bad rap. Trapping clients in a vicious cycle of debt is a common accusation. In reality, these loans help reasonable borrowers capable of managing their budgets. The accusations could be justified if the institutions were operating beyond the scope of the law, deceiving people into signing misleading contracts. However, this is not the case.

Although there are some unscrupulous providers, the industry is regulated by state laws. Reputable online lenders at and similar platforms conduct honest business. In any case, you should always do some research before signing on the dotted line. Search for institutions that have been around for many years, with genuine customer feedback available.

Reasons for Negative Perception

Generally, the easier it is to obtain a loan, the more you have to pay. Quick loans are often provided to people with poor credit scores. These applicants are rejected by conventional lenders and run out of options. This explains the downside of easily accessible credit — its cost.

Critics like to cite the daunting APR (annual percentage rate), claiming that 300% or 400% is daylight robbery. It must be noted, however, that a responsible borrower will never pay this much. After all, his loan is often repaid in two weeks. Generally, for every $100 borrowed you will pay $15 extra.

This means that annual percentages, which must be specified by law, are not fully relevant. They could be used for comparison of quick lending with conventional bank loans, which will always be in the banks’ favor. It is, however, important to understand that payday loans are only emergency financial tools — they help us cope with unforeseen money shortages over a short period.

Real Benefits

1. Quick approval

Today, when many institutions operate online, you do not need to leave home in order to submit your application. Approval takes little time, and there are few documents to present — usually an ID and proof of employment.

2. Quick transfer of funds

The money may land in your account on the very next working day. This is incomparable with lengthy procedures in banks.

3. Quick help

These loans are meant to fix financial emergencies. When faced with a force majeure event, you can rely on such lenders to provide you with funds in no time.

Important Considerations

This type of lending has its advantages, but it should only be used by those who can manage their finance effectively. Borrowed money is easy to spend, and reckless individuals may end up in the dreaded debt cycle. Before repaying their first loan, they request a second one, a third one, etc.

Before signing on the dotted line, you need to be absolutely sure you can meet your future obligations. Such loans are tempting, but they should be used with caution. Keep track of your spending and include repayment as a top priority in your budgeting. In this case, payday loans will bring financial help without causing any damage.

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I'm the leader of Techno FAQ. Also an engineering college student with immense interest in science and technology. Other interests include literature, coin collecting, gardening and photography. Always wish to live life like there's no tomorrow.

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