Some time ago I wrote a rather blistering article about Payday Loans which you are welcome to read. But because of its tone, I decided to take a second look at this multi-billion dollar industry in order to learn and to offer you, the reader and consumer, any positive aspects of payday loans.
By way of background, payday lending is primarily regulated at the state level. However in October 2006 the feds capped lending to military personnel at 36% APR. Additionally, some federal banking regulators and legislators seek to restrict or prohibit the loans not just for military personnel, but for all borrowers, because the high costs are viewed as an unnecessary financial drain on the lower and lower-middle class populations who are the primary borrowers.
It should be pointed out, however that the moneys charged for payday styled loans are fees and not interest although the argument is made that the suggested interest equates to the fees charged. Similarly, lenders say these loans are often the only option available to consumers with bad credit or who cannot get a bank loan, credit card, or other lower-interest alternatives. I tend to agree. There are rarely (if ever) credit checks made on the borrowing consumer which can often times be a blessing for those in need.
But through all of the arguments pro and con, one key point needs to be made over and over and over. If the consumer elects to use a payday loan, the loan should be for an emergency only and should never be made for an amount greater than what he or she can afford to pay back on the next payday. I cannot emphasize this strongly enough.
Payday loans can be a solution for those in particular situations as suggested above. But during my research for this article I was quite surprised to find one company with an issue very appealing to individuals meeting the desperate conditions I just mentioned."National Payday" offers a free first time borrower loan. The major conditions of this free loan are that you are a first time customer and that the loan be paid back fully within the allotted time. My suggestion to the consumer is to visit their site and speak to a representative for more information. Approval can occur in minutes and checks are directly deposited into your checking account.
In the classroom I teach that you cannot borrow your way out of debt. But if your unique circumstnces do require an emergency short term loan and the money is no where else to be found, payday loans may be a viable option. Just insure the money is there to repay the loan when due… or forget all about getting out of debt.
Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years.
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