Most people have a negative opinion about the payment day's cash loans. There has been a lot of media coverage in recent years that seem to emphasize the negative points in these products without exploring the benefits in a definite way. The bad press that the cash loan industry received and still receives is very biased and should not be invoked. In this article we will look at the common errors highlighted and also balance the argument with the inherent benefits that the service gives borrowers.
The first negative point you hear about cash loans is that they are expensive. For a $ 1000 loan, you can be charged $ 50 after one month. It is usually the quota that cash loans cover. Rarely exceeds a cash lending $ 1500. The negative press will tell you that this loan corresponds to a 60% p.a. Loans from a bank if you look at it on a yearly basis. While this is technically correct, it is a big mistake to value cash loans in this way.
It's first a mistake because cash advance loans are designed to be short-term loans to be cleared in less than a month. I have not yet seen a case where someone takes out loans for a loan for one year. It simply does not happen in real life. If you look at it as a product as it really is, namely a loan with a maturity not exceeding one month, the interest rate is actually only 5%. If you look at it properly, these products are actually relatively cheap for the convenience they offer.
In the big proposal for things, $ 50 to pay for emergency money in your bank is not really that expensive. For most of us, $ 50 is really much cheaper than a negative post on your credit report. It's really cheaper than paying for late fees or incurring huge penalties just because you do not need extra money in your account to settle your outstanding debt. It's also cheaper compared to the face that you can lose from asking your friends or colleagues to borrow some money to keep your ends tied.
In addition to the "price" of cash advances, the negative media has also focused on the rigidity of these products. We actually believe that this is an advantage. The stewardship serves two purposes, the first and most important thing is to enable companies not to go through difficult and often offensive rules governing major lenders. With this, many smaller companies can be set up and let this service be made to more people. The second purpose is to limit customers' exposure to excessive interest rates. Although customers may request a "roll-over" if they do not have enough money to solve their current service, it's not as easy to do as most would think. It is up to the lender to approve or reject the request and the borrower must simply make the request. There is no silence and hope they will roll over for you.
There has been a lot of finger pointing out that the cash advance lending industry is also set up to benefit from people in the low-income group. Although it seems to be the case at the beginning, the real view is actually dunked by the fact that the biggest payouts are only $ 1500. In general, only the lower income groups would need a loan of such a small amount. Higher income groups would generally require bigger loans as cash advances loan companies simply can not accommodate. It is also proved that there are higher incidents of financial mismanagement among the people in low-income groups, and it may also seem that cash advances companies try to benefit from them. In fact, cash advances loan companies provide a service and it is very much up to the customer if they want to use it. The terms are clearly stated and are very easy to understand unlike some loan products from major financial institutions.
Overall, if cash loans are used in the way they are intended to be, as a short-term "lock" to tie loose ends, they are really a product that is very useful and beneficial. It's only when the products are misused or used in an incorrect way that they will cause problems. This can be said about any financial product and should not be the only fault of cash advance loans. It is safe to use them, be sure to use them properly.