This is why payday loans are popular but still not so sought after
Some homes struggle to even make three square meals a day:
The economic conditions in the world are never static and most of the time there are situations where the world is either reeling under terrible recessions or is wriggling out of one with the consequence that there is highest inflations happening in things that are of basic necessities. Higher rates of inflation will mean that by the time the family is in the second or the beginning of the third week of the month, the paycheck is already exhausted and the salary account is already dry. This means families with children or more number of older dependents may even be struggling to put food on the table. How can a family subsist and carry on living without having little cushion to fall back on?
Savings are out of question in such cases:
When people are struggling to make their ends meet and their accounts run dry in the second or the third week itself, you can imagine that these people are also not able to save a penny in many years. Such families may struggle to pay their monthly bills and groceries are only half done because of lack of fund.
Add to this their employment woes:
Such people at the fringe of the society are also those who are constantly living in fear of losing their jobs. All hell can break loose if something like that has to happen. Just imagine what happens if there is a medical emergency in a family like that or an addition to the family or even a death?
The vicious cycle:
Credit cards and debt traps are imminently connected. Misuse of credit cards for all and sundry can end you up in pervasive debt trap and that too if the debts are not paid in time the interest rate which are spiraling high can get compounded and in some cases the rate of interest itself can exceed the actual principal amount of the loan when secured. Usage of credit cards is definitely not advised. Then what is the next best option that they have?How about going in for a payday loan? A payday loan is a short term loan which can be secured for small amounts for a definite period and the definite due date for the repayment of the loan is the payday that will fall immediately after the loan has been borrowed.
This is an interesting concept:
The payday loan is designed to help the employees whose account fries up by the time they are in the third or the fourth week of the month. A payday loan allows them to maintain their standard of living or meet any kind of exigency or emergency situation so that when their paycheck is received the person’s account is immediately debited of the loan amount. The borrower at the time of the application of the payday loan provides the lender with the details of his salary account and other bank details and also provides the lender with post dated checks so that in the event of the default the lender can present the post dated checks to the bank and claim the reimbursement to his loan amount.
The payday lender does not ask for any other security:
The lender loans the amount in good intention and without asking for any kind of physical security or collaterals to be furnished by the borrower. However, in the even to ft he default of loan payment done by the borrower, the kinder is sufficiently secured because he has in his possession PDC or Post Dated Checks that are given to the lender by the borrower.
No hypothecation of good as a remedy here:
Since, there are no goods or valuables deposited as collateral for the loan borrowed; the lender has no civil remedy of hypothecation of the goods. Instead, how the lender spreads his risk is that he lends the money at a marginally higher rate of interest than what is in the market.
As if this is not enough:
Not only do the lenders charge substantially higher than their counterparts but they also compound the rate of interest at the time of the repayment of the loan amount in case the borrower repeatedly defaults at subsequent due dates. The compounding of the already high rate of interest can literally snuff whatever little saving or valuables that they have.We are saying that a payday loan is the most appropriate remedy in a society where the rift between the have and have nots is pronounced but at the same time we also appeal and make a case to the lenders to be more conscientious to the needs of the people and to not charge usurious rates of interest. Because then people will not be able to come up in life and they will live in misery and be forced to die in misery!