The concept of payday loans has been around since time immemorial and with every passing year, there is a common thought that crosses the mind of many and that is whether the payday loans are really helpful or they are a trap in disguise.
Despite the fact that these questions do cross our minds but that does not deter individuals from opting for the same. Of late, the payday loan industry has been criticized for the way it operates. This essentially includes a failure to check credibility of borrowers and their repayment capacity.
Also, the astronomical rate of interest that these short term loans attract have also been criticized as these loans are also extended to the ones that have a damaged credit score. As such, the individuals that are genuinely in need of money are oftentimes left behind and are not willing to be dealt with unless they apply for these loans well in advance.
Regardless of whether you are opting for payday loans online or from stores, it boils down to the same dilemma, is it worth it? However, this industry has certainly made few changes. And one of the greatest change that has been registered and worth noticing is that unlike the yester years where lender of payday loans were ignorant about the past credentials and loan history of their borrowers, these days, you will find that each lender shares information about their client with another lender.
In this way, you get to know whether or not a particular borrower has availed such a loan before and if yes, the details of the same. This not only helps in judging the repayment capacity of the borrower but the new lender is also aware whether or not he is dealing with a risky client.
Marketing the products
Aside from imposing restrictions on the way these payday loan lenders operate, another important measure that has been taken by the regulatory bodies is that there is a limitation with regards to the number of times a payday loan lender will be able to promote or market his product. This norm was introduced after complaints were registered against few payday lenders that had not adhered to the formulations of authoritative bodies like the Advertising Standards Authority or the ASA.
Boon or bane
For the ones that could access quick cash, this definitely is a boon. But in the event they are not able to pay off the loan within the stipulated time period, it was a bane for these unfortunate borrowers. Why is it so? It is a well-known fact that if you are not able to pay back this cash advance within the time you are expected to; the loan will attract a rate of interest that can get you into a vicious cycle of debt.
Oftentimes, there are borrowers who are not able to live up to the high interest rate and struggle to wriggle out of the debt trap. It is essentially a bane for the latter and a boon for the ones who can repay the cash advance or these payday loans within the given time. But remember, there can always be a reversal of the situation as it is difficult to predict the financial fate of the individuals who have a habit of living on the edge.
