The User's Guide to Payday loans

Henry Githinji

Henry Githinji

Henry plans to be an entrepreneur with his own financial consultancy firm, specializing in in binary options and stock trading. Henry is a day trader and plans to use the capital he makes to launch his business. He plans to build a portfolio that attracts investors through his trading performance.
Henry Githinji

Why payday loans should not be banned

The popularity of payday loans has kept on growing since they were introduced in the 1990s. Payday loan companies offer people the chance to pay only a dollar in interest for being lent money before payday which is basically tempting for anyone who hears about it. 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?

images (2)First, the common misconception that payday companies are taking advantage of their customers is actually something that people are trained to believe. 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 do not look at a person’s credit worthiness, he or she can be rest assured that their assets are safe. Payday lenders will, 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 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 period 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 stand a risk of losing their homes. Getting a payday loan can prevent foreclosures and getting money from illegal sources.

images (1)Although there are others who might think that payday loans want to “rip off” poor people and thus vote for them to be banned, they are actually misguided. 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 to get immediate assistance.

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