When it comes to an urgent requirement of money, many people often rely on the payday loans, but friendlylender.ca suggests that it is not the very best option at hand. Yes, it is true that this type of loan can be a good option for people who can repay it within a short frame of time and has the capability to do so without much constraints but it isn’t for every single person on board.
If you have been looking forward to taking out a payday loan, know about these shortcomings first before you end up making a rash decision that can impact your financial stability in the end.
What are payday loans?
For those who aren’t aware, payday loans are the type of loans which can be sanctioned in a matter of hours with no possible cross checking for the credit balance and such.
Why are they bad?
As we did mention before, payday loans aren’t the best option, here’s why.
Very high rates of interest
The very first and possibly the most important reason why this isn’t the best option is because of the kind of interests they charge. The same goes up to 36% of the sanctioned amount as well, which is nothing short of ridiculous when you do come to think of it. These kinds of payday loans are often offered by the local merchants and lenders around the localities or to the residents who don’t qualify for the standard requirements of the loan. It is best suggested that you thus keep an eye out on the rate of interest before you even think about delving into the same.
Repeat cycles are common
Given that the rate of interest is so high, many people often tend to find themselves stuck in a situation involving a repetitive cycle. What this means is the fact that many people often take up payday loans to just pay their pending payday loans. As crude as it sounds this is the reality and this is what happens for the most part. Given that these are often illegally bound, many people end up being in constant debt or face issues associated with the assets or the things that they kept at stake against the money they withdrew.
Constantly rising rates
If you are taking a loan of $100 and you have to pay around $30-$40 in just the rate of interest, do you even think that the same will end up doing any good to you? That is exactly what happens with the payday loans. Owing to the fact that the interests are so high, majority of the people often tend to find themselves in a situation where they are never able to dust off their debts and are constantly stuck in it for months or even for years at a stretch.
Last but not the least is the fact that taking these loans aren’t safe for you or even for your family. For the most part, they are given by the local merchants who have people to hustle the money out of you if you fail to pay them on time. The added harassment is a completely different scenario. Additionally, many of these lenders tend to not do any kind of verification and even need access to your bank account which can prove risky in the future.
If you are on the lookout for immediate money, it is important that you opt for some other alternative that won’t end up questioning your safety and security. It is best that you either save up or take a loan from a credible source with the minimal rate of interest.