Most middle-class citizens are no newcomers to being bitten by cash crunch. This sometimes causes “making ends meet” very improbable, with credit cards reaching their lending limits and banks enacting stricter rules for loan processing, a new alternative must be found. For many, payday loans may seem to be the savior in perilous times especially with their relatively easy mode of operation, but on a closer examination of their services, it is evident that there is more to it than meets the eye.
HIGH INTEREST RATES
Credit card interest rates become a child’s play when compared with payday loans interest rates. The exorbitant rates are blamed on the fact, that many people who access this loan facility have little or no option left. While these loans are meant to be short term solutions to problems, the echoes of the interest may linger for some time. Imagine paying over 200% interest rate on a month, as a long loan. Also note that during the application process, your bank details are given out for direct deposits or e-deposits transaction, this means that they have access to your bank account for accessing their interest rates.
Similar to hidden bank charges, payday loans also possess their own hidden charges. These charges are apart from the capital and the high interest rates. Hence for every $100 borrowed, the lender charges about $17.50 up to a cap of $300. This is hidden from many borrowers because with the euphoria of accessing “easy loans”, they fail to pay apt attention to the terms and conditions of the contract. These fees make payday loans online a nightmare for borrowers, who can’t cope up with their repayment plan.
SCAM AND LOSS OF PRIVACY
During the loan application process, your bank details and employer’s information; this facilitates lending company to deposit the money into your bank account electronically and then collect their payments in the same manner. This makes you vulnerable to scam if your information falls into the wrong hands. Also, you have approved the lender access to your checking account, which is a great breach of privacy. This may be used against you for blackmail, if the wrong people gains access to your checking account. Read more.
LIMITED FINANCIAL FLEXIBILITY
A major con of payday loans is that they impose rigid financial boundaries and deficits in the budget of the borrower. After the loan settlement and paying up of the high interest, there is little or no money to cater for one’s self and family. Else, there is no need for emergency cash; the settlement period can be very trying. This underlines why, payday loans are needed for only urgently important issues only.
NOT FINANCIALY WISE IN LONG TERM
Payday loans can provide quick relief from debt, problems, and emergencies but in the long run, they are not smart financial options. The unfavorable conditions that come alongside such loans make them very unwise options to take on. Taking payday loans online can also drive people into a cycle of debts because after struggling to pay out one loan, they may not be able to make ends meet, so they resort to picking another loan.
Payday lending agencies may make their services attractive and customer friendly, but on defaulting any of the terms, you will certainly pay additional fees through your nose. Also, picking a payday loan today usually may not be of greater help to you but will compound your financial woes. Click here for more information: https://www.unclebuck.co.uk/payday-loans/