Are Payday Loans Really Bad? Find out Yourself

Seeing so many bad write-ups online about payday loans and you stop to ask the question; are payday loans really bad? Well, you will find out yourself.

When it comes to debt, frightening terms like “debt traps”, “high-interest rate” and “debts cycle” are often associated with articles that give readers a scary picture about payday loans. S

ome people also say that there is nothing worse than payday loans. That’s the verdict of some people. But is that really true? I mean payday loans are loans and you need money, so obviously not everyone will agree with them being bad.

So let us look at it a bit closer and discover if payday loans are as bad as everyone says they are.

Views About Payday Loans

There is a lot of controversy about payday loans. Some people say they are a godsend for those with poor credit and no savings.

Others say they are predatory, charging enormous fees and interest rates. I am going to look at both arguments and let you know whether payday loans are good or bad.

Payday loan services have earned a firm place in the public’s eye and the business community. On one hand, they cater to sectors like manufacturing and retail that are often left out of other financial services’ purview.

While on the other hand, they are so expensive due to people have taken them in open contempt. But is this hatred justified or are payday loans really bad? You will find out yourself in this article.

What do payday loans offer that traditional and/or other credits don’t?

Not all payday loans are terrible. There is a way to get this credit without suffering long-term consequences.

1. Quick Approval

Payday loans are very common in today’s society. It is easy to apply and you get your money in a second. Tons of people use this service every day because, within a few seconds of the credit application online, you have gotten your funds.

You probably know a couple of people that ask you for a loan as soon as their paycheck is over, so they can pay some bills or buy at least a little something to eat. Regardless of what you think about this type of loan service, it is growing in popularity.

2. Easy Application

Payday loans are a fantastic idea for helping people who need short-term credit. That being said, you can just pick up your phone and apply for such a loan.

No rigorous processes are involved. All you need to do is download the app or visit the lender’s website or office and fill out the application forms and supply all necessary information and get your cash in a second.

3. Short-term requirements

When someone wants to get a payday loan, it is probably a sign that something is wrong. They may need money quickly and don’t want to wait for a paycheck in the mail. However, borrowing money can cause problems if it isn’t paid back on time. So as the requirements are easy, make it also easy to repay as at when due.

Their requirements also come in handy. You are requesting just a small amount of money and you are asked to bring a guarantor, collateral, and other long documents which can take time to get. Payday lenders know that you are getting this credit for a pending emergency and they will treat it as an emergency.

4. 247/Accessibility

Debate is still raging over whether payday loans are good or bad. Regardless of your position, you should factor in the 247/7 accessibility as one of the reasons why payday loans are unique.

These are factors that you should consider before applying for a loan. They are consistent and always available online and offline equally.

5. Available online

The Payday Lending System (or Payday) refers to a type of credit that has been designed for everyone but is especially an advantage to lower-income customers. You can apply for this loan online with your smartphone.

The system is used by lenders, credit unions, and other financial platforms to provide access to smaller loans instantly. Instant loans are often associated with online loans which come quickly.

6. It favors those with bad credits

If you work in today’s business world, there are probably a lot of people borrowing from each other. Some employees even ask for loans from their coworkers to cover bills. Others use the money to cover short-term expenses or to buy food. Although these practices might seem unprofessional, they are becoming more common.

However, when you have borrowed and can’t pay it back, you have already soiled your credit score. But payday loan lenders favor people like this in terms of emergencies with small funds but come with a very high-interest rate.

7. No collateral

Nowadays, the majority of the population has to work really hard just to survive. Then to survive, you might need a loan from time to time.

When you have chosen a lender, be rest assured that they don’t request collateral.

Well, most people use payday loans for that extra push and might not have the instrument to take credit from banks and other institutions in Kenya. Hence, they will be choosing payday loan lenders.

Pros and Cons of Payday Loans

Pros of Payday Loans

For people who need money quickly and can’t wait for a scheduled paycheck, payday loans are an option to consider. It is important to pay back the loan on time so as not to compound financial issues.
It can be an emergency loan measure to cater for an unplanned event.
Payday comes in fast, without much delay
It is applied by most people because most times it comes in handy
It is always available online and offline
Not rigorous and also comes with minimal requirements
Can favor those with bad credit

Cons of Payday Loans

A payday loan is a bad idea if the interest rate is high and you may need a lower interest rate credit
It may also be a bad idea if it is not paid back on time. It may be a sign that something is wrong and that you lack the financial ability to pay for your basic needs in a timely manner. Thus, you will pay double.
Most times people are stuck in a debt cycle because of Payday loans.
Payday loans can cause serious financial problems if they aren’t paid back in two to three months.
Sometimes the terms and conditions may be hidden.

Things you should know about Payday Loans

Payday loans are usually small credit that should be repaid in a single payment.
At times, you will wind up paying twice as much on interest
Most times at worst you could get stuck in an impossible cycle of perpetual debt given the exorbitant interest rates.

Conclusion

Payday loans are growing in popularity. When a person’s paycheck gets small, they can use these loans to buy what they need until the next payday.

However, it comes with a high-interest rate and that is why most people run away from it. It can also put you into a serious financial problem or debt cycle if you fail to repay the loan.

The obvious still remains that if you are caught up in a financial emergency, payday can be the solution because it comes in handy and gets delivered within a few minutes of application. Many people use this service every day, and many more will continue to do so in the future.