How many times have you heard the word “payday loan” and then heard some terrible story after? You hear it almost all the time. The most common accusation behind payday loans is how people get trapped in a vicious cycle of debt every pay period. In hearing these payday loan horror stories, did it ever occur to you why people would get caught in its “vicious cycle?” Probably not. People just automatically assume payday loans are bad without even looking into why they’re considered to be so bad.
Why Payday Loans Have Gotten Such a Bad Rap
What people fail to realize is that payday loans are for a specific purpose and when they’re not used for the purpose it serves, that’s when things get a little stressful. Payday loans are ideally meant for emergencies only… people don’t realize that. Why else do you think it’s so easy to get approved for a payday loan? Just think about it. With payday loans, you can apply, get approved, and have the money you need in your hands within minutes… when emergencies arise, you don’t have time to wait days to know if you got approved for a loan, you need that money right then!
Irresponsible Borrowers Not Using Payday Loans For Its True Purpose
Of course, there are people who abuse payday loans, getting them for vacations and other non-emergency needs. Payday loans are meant to bring financial relief to those in a tough financial bind. In most cases, people don’t have the money they need right then for that emergency but when their payday rolls around, they have the money to pay it back and pay it off.
These are who you would call responsible borrowers. Responsible borrowers actually appreciate the convenience of the money and have full intent to [ay it back when they get paid. For those using payday loans for the wrong reasons, they don’t appreciate the convenience of the money and don’t even have a sense of urgency in needing the money. That reason alone is why it’s so hard for them to pay it back, leaving them to renew every pay period and get caught in the so-called “vicious cycle.”
To be fair, the reason why payday loans have also gotten such a bad rap is not solely because of irresponsible borrowers. There are other factors as well.
Higher Interest Rates Make People View Payday Loans Negatively
Ok, so the higher interest rates that are associated with payday loans do tend to look bad in the eyes of consumers BUT if you really think about the convenience of it all, the higher interest rates are totally worth paying if you were truly in a financial bind and needed the money. It’s only to those that aren’t in a bind for the money that will have complaints about paying the higher interest rate.
When you’re in a financial bind and need $300 right away, the last thing on your mind is paying a higher interest rate… your only concern is getting the $300 to take care of your emergency, regardless of what the payback amount is later.
What are the Benefits of Payday Loans?
Benefit 1: You Get Approved Instantly
With loans, the name of the game is called the witing game… but not with payday loans. With loans from banks and other financial institutions, it can take hours to days to know if you got approved for a loan… and that’s just for the approval, not including how long it will take for you to get the money IF you get approved.
Benefit 2: Funds are Available the Same Day or the Next Day
If you visit a payday loan company in-person and get approved, you can leave the same day with the money you need in your hand. If you go with an online loan company, the funds can either be in your account the same day or in your account the next business day.
Benefit 3: You’re Getting the Help You Need
When you have an emergency, what’s the main thing you need? Help. According to CNBC, 57 million Americans don’t money saved up for emergencies. That reason alone is why payday loans are so beneficial when used for emergencies… because so many Americans don’t have the money saved up for emergencies anyway. When emergencies hit, payday loans are there to provide the help you may not be able to get anywhere else.
If You’re Going to Borrow, Borrow Responsibly
So as you can see, payday loans aren’t as bad as people make them seem. To truly benefit from payday loans, you need to use them for their true purpose… emergencies only. You can be on the straight and narrow path to achieving your financial goals, and then out of nowhere, a financial emergency comes up… Would you have the necessary funds available to cover that emergency? Or would you be like the 57 million Americans who don’t have an emergency fund set up?
Also, when looking at payday loan companies, you don’t want to just go with any company, especially for online payday loans, you need to make sure you’re looking at the best payday loans online.
Because life happens and needing emergency funds to come with it sometimes, it’s important to know that you have options. Just making sure you’re borrowing for the right reasons and you’ll quickly find out that payday loans aren’t as bad as you think.
