It seems that there are a lot of people these days that need to resort to a payday loan and many are against them. There are those that say that they should be banned because they take advantage of the most vulnerable but others that feel they should stay. But are there really arguments that stand up in favour of them considering how much bad press they have had?
A payday loan is often the only form of borrowing available that does not need a credit check. This means that anyone can potentially borrow money using this means as long as they can prove that they have an income. Some people feel that this offers equality in the world of lending meaning that it is something that everyone can do. However, there are draw backs in that the cost is very high. As the borrowers are seen as high risk, the lenders charge a lot of money so that if some borrowers cannot repay, that cost is covered by the borrowers that can.
A payday loan is also organised very quickly. The lack of a credit check means that loans can sometimes be arranged in a matter of hours. This means that if you need money extremely quickly and have no overdraft or credit card available to you, then this could be an option. If you have no money for bills and are being threatened with being cut off or cannot afford food for your children, you will be able to organise the loan really quickly and get the money that you need.
Alternatives for payday loans could be considered to be a lot worse as well. Loan sharks are often used by those that cannot get money from a conventional lender and they are not pleasant to deal with. It can be a better prospect to risk getting charged high fees than thinking about what might happen if you cannot pay them back. Of course, rather than this some people may turn to theft or other illegal means to get money, which again would be very much less desirable than a short term loan.
It is a difficult debate. No one wants to see vulnerable people being overcharged for borrowing money, but as they are a high risk, lenders will not lend to them otherwise. If money is needed quickly, then this could be the only option for many people. If the alternatives are very much worse, then this could be seen as a good option.
It is very important, however, that anyone considering getting a short-term loan is fully aware of the costs and the consequences of not paying it back on time. They need to consider whether they really need the money and if this really is the best option available to them. It can be difficult to think clearly in this situation, particularly if you are panicking or emotional so discuss it with someone else. There are free debt counsellors available or a friend or family member may be happy to listen and help you out with some helpful advice.