Latest posts by Henry Githinji (see all)
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Why payday loans should not be banned
Payday loans are popular because they provide a borrower with a cash injection before payday arrives. Such loans are fast, unsecured, and can meet urgent needs. Introduced in the 1990’s, payday loans have grown significantly in popularity over the past few years. The convenience and ease is what makes payday loans really tempting.
However, not many remember that payday loan lenders are shunned by many people in the loan world because they are seen as predators who take advantage of people who are just trying to make ends meet. There are some states that feel strongly about this hence they have taken the initiative to ban payday loans outright.
These states may have their own reasons for banning payday loans, but what they do not put into context is the number of people who will be left out of easy access to loans when they enact the regulations.
Can a ban on payday loans really be justifiable?
Most payday companies do not show high-profit margins in their financial reports as compared to the other lending institutions. This is because the meager amounts they lend out are just meant to solve financial emergencies that are not that serious.
Since most payday lenders don’t look at a person’s credit worthiness, he or she can rest assured that their assets are safe. Payday lenders, therefore, target a person’s salary from which they will be deducting what he or she owes them. Although some money lenders apart from the payday lenders give the borrowers the freedom to choose their payment period, they actually require collateral and will come after the borrower if the person does not pay them within the stipulated amount of time.
Although the fees for payday loans may appear high when projected over an entire year, they are actually a reasonable and cheaper option when compared to other short-term options such as bouncing checks, avoiding bills or missing payments for credit cards.
Since they are intended to be repaid within a duration of two weeks, most people will have paid them before the one year has elapsed and at the same time, none of their financial obligations will be left unattended.
Payday loans may look like they are leading one into a debt trap but that is not necessarily true.
Payday loans are given to people who have full-time employment. People go for payday loans because of financial emergencies and because they know that what they borrow will be deducted directly from their salaries, therefore they do not have the risk of losing their homes. Getting a payday loan can prevent foreclosures and getting money from illegal sources.
Payday loans are actually meant for people with low incomes who do not want to get buried in their financial crises as they wait for their salaries. Payday loans, therefore, give one the financial freedom they desire.
Payday loans have been around for a long time and if they were to be completely banned, many people would indeed be denied quick, reliable and efficient access to money when they are in urgent need. Therefore, anyone looking for a payday loan should visit https://green-touch.org to get immediate assistance.