Payday Loans: A Nuisance or a Blessing?

A payday advance is a small cash loan taken by a borrower from various payday lending stores and is intended to cover his expenses till he can pay back the lender which is the usually day of his next pay. There is a fixed percentage that the lender charges against the amount of money borrowed.

Normally payday advances are of $250 and may also go up to $500. The lender is required to submit a cheque of $325 dollars in advance for borrowing $250. So you see what is happening here? The lender, already lacking money to cover his expenses borrows money and has to return it with a high fee which might deteriorate his already existing financial situation.

Although one may argue that payday advance is a quick and useful tool for you in going about our daily lives, helping you meet your daily expenditure and needs on top of unexpected financial calls, if you stop for a moment and look at the bigger picture here, is it actually a blessing as it seems to be? By taking up more loans, lenders are not only not saving any income or assets for the future but are also depriving themselves the chance to move up higher in their financial standing. This is adversely affecting the community as well. Is exploitation of these lenders and the community for a small profit worth the money gained by these lending stores?

Payday advance seems to be most popular with the low income households. When a person takes a payday advance, he usually gets himself trapped in the continuous cycle of debt- taking loans and repaying them with a fee on his pay day. When a borrower is unable to repay the lender due to insufficient funds available causing the cheque to bounce, the lender may take legal action against the borrower- charging him with cheque fraud. Criminal prosecution may follow.

However, it is important to mention that in spite of all these negatives, there are several positives as well.

This system protects and helps its citizens get through their lives easily by reducing their financial strains. It gives them easy access to money when they are in need of it most. No doubt, there can be issues, but these issues can be avoided if you move in the right way. But, it is worth mentioning that criminal prosecution and other such are illegal in many countries under various laws. So, things are not as bad as they look. But, you will still be better off comparing your needs with the pros and cons of taking payday loans.

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