Quick Cash Loans Are Not All Bad
The explosive increase in the number of stores that provide payday loans has astonished legislators and consumer advocacy groups, who worry, with good reason, concerning the fact that consumers remain eager to borrow money at rates of interest of up to 500% per year. While stores that offer cash advances numbered in the few thousands in 1999, there are now over 20,000. In a few cities, there are multiple shops on just one block, and despite the large number of businesses that provide them, there is no level of competition in offering cash advance loans. Each and every store in a given city is asking the same rates as every other store.
The interest rates aren’t affordable. In exchange for borrowing an amount that varies from $100 to $500 for fourteen days, a consumer has to repay the loan along with a fee that varies from $10-30 per $100 borrowed. If he or she cannot pay back the loan after two weeks, the cash advance can usually be renewed for another fourteen days, if the consumer pays the charge again. The brief duration of payday loans often makes it hard for customers to repay, and many of them end up repaying the fees again and again. Or they sign up for a different loan from another store as a way to pay back the original loan. Nevertheless, despite the high costs, the companies are successful and these loan companies provide billions of dollars in cash advances each and every year.
If the cash advance are so expensive, why are the stores so successful? Why do so many individuals apply for payday loans?
The answer can be explained in a single word – convenience. Taking out bank financing might save debtors a lot of cash, but bank financing along with other, more formal, types of loans require some resources that a lot of would-be debtors simply don’t have. The lure of payday loans can be attributed to the typical demands of the stores that offer them, which often require no more than these:
The consumer be a person of legal age
Have a current job that they have held for at least three months
Have a bank account.
Be an United states citizen.
Have no other outstanding advances from that shop (in several states, from any store.)
That’s it. You can aquire a loan with no credit check. Loan companies are not seeking to analyze your credit score. They do not worry about other payday loans you might have. They do not care if you had a recent personal bankruptcy. They do not care if you have paid your cable bill late three times in the past six months. If you satisfy the requirements above, they will probably lend money to you, which is one thing that no traditional bank is going to do with as little information as the minimal requirements that the majority of cash advance stores require. It should be no surprise that these shops are profitable; they are going to accept nearly anyone’s business.
That business includes a price, though. That price is an average rate of interest of nearly 400% per year. The success of these stores suggests that convenience and simplicity of use is an very important thing to consider in borrowing cash.
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Perry Monkhouse is an Internet marketer with years of experience. He has written articles on a wide variety of subjects.
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