Payday loans have been around for many decades. As a matter of fact, they were the primary form of the traditional loan sharks.
Well, you can say that Payday loans allow people to attain a quick resolution for their immediate needs and then return the loan on receiving their pay cheque. It is very important to know the dynamics of payday loans just in case you need to apply for one in the future.
In this post, we will examine how modern day payday loans are operating and transforming the market. How well they have been received by the fin-tech industry and what’s their future.
Payday loans as you already might have heard by now have many advantages.
First and foremost, they offer a viable option of providing fast cash. Most payday lenders process your loan requests within a day and this allows you to resolve your needs as swiftly as possible. This is perfect for people who have urgent needs, such as paying a utility bill or rent on time.
Immediate Funds For Specific Needs
One of the chief advantages of payday loans is that it frees up the burden when questioned by family or friends who loaned you the money. It also provides independence of buying things immediately rather than having to wait for your salary, where the item might go out of stock or sale. Thus, payday loans assist in managing your monthly budgets especially if you seeking to learn how to manage finances.
In comparison with payday loans, credit card loans can only be availed for specific needs. You need hard cash in order to spend on private matters. Payday loans are perfect for such needs. You can spend the money that you get, on travelling, paying a bill, or simply ensuring that you can buy an item, while it is on sale. Payday loans give you the independence that you require with your money.
Another benefit associated with payday loans is that they do not necessarily require extensive credit checks. This further allows them to be processed very quickly. The loans also offer the option to obtain a loan having a poor credit history. Your eligibility is just based on the ability to repay when the next payday arrives, thus the name ‘payday loans’.
Modern payday loans can be termed as cash advances since the optimum use of these are to repay them as soon as possible. Currently around 300 payday lenders serve the market in Great Britain facilitating low-end consumers. The changes in the local laws regarding payday loans have made them more secure and people can now use them without having to worry about paying unimaginable interest amounts as well.
You can easily access these loan types online as well pawn shops. Although there was a negative perception about payday loans in the past, they have become as a very popular resort since the recession of 2008/09. They are able to serve all those in immediate financial need and hence, many banks are starting to include this product in their group of offered services too.
Again in comparison, credit cards need complete background info and checks. Many applications are often rejected due to poor credit history. On the other hand, payday loans are very easy to get. There are many online payday lenders, which allow you to simply provide information on the internet in order to qualify for the loan.
At most, you need to show regular employment details and proof of income. You need to mention the current salary that you are getting and there is a high probably that your loan application will be immediately approved after a simple background check.
It might seem that you require spending extra resources to return loan with interest. Payday loans can actually help you save money. You often need to pay additional charges and penalties if you miss your instalment on a number of bills. Taking the facility of a loan to pay on time saves you from a lot of hassle and also ensures that you do not have to pay any penalty. This means that you can avoid additional charges in terms of extra credit card fee or paying for bank overdrafts.
Payday loans are also beneficial for credit rating since you never need to rely on using your credit card every time. Just simply apply for a payday loan and cover your financial shortfalls and then return it within the agreed time period. You can simply take a payday loan and return it as soon as possible. This way, you are protected against damaging your credit history by increasing the bill already present on your credit card.
What does the Future Hold? Expectations of Relevance in the Future Economy
The future of payday loans is on its way in joining hands with technology. Many traditional payday lenders are moving to an online mode, where they do not have to spend on keeping physical infrastructure, therefore reducing their expenses. This allows these lenders to give out payday loans with lower interest rates. It also allows them to cater to a nationwide audience.
Click here to read Columbia Business Law Review’s insight into the future of the industry and how payday loans are eliminating the consumer debt trap.
With these innovations, the payday loan industry is expected to be brighter than ever. New regulations have ceased lenders from charging a full 100% APR, hence avoiding the danger of bankruptcy for many low income individuals. Since there will always be many financial institutions who will serve to support them, the payday market segment will continue to expand in the near future and we may observe a rise in the average amount of payday loans being taken in the long run.