| Unsecured Payday Advance or Loan Shark |
| By Credit Federal |
Published
05/11/2009
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Payday Loan
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Payday Personal Loans VS Non-Bank Loan Sharks
Some refer to payday lenders as legalized loan sharks who are as predatory as mortgage lenders. Yet even the latter is not quite accurate.
The mortgage meltdown is not entirely the fault of lenders. One cause of the meltdown was government pressure for mortgage companies to approve loans they would have otherwise rejected, such as large amount home loans to people who couldn't afford them. But since there were people who wanted to buy more house than they could actually afford (and the government pushed for loan approval), mortgage companies offered Adjustable Rate (ARM) Mortgages to make monthly payments of these big loans affordable for a time to poor income people. Apparently, many of these borrowers were confident their income would improve before the higher rates took affect, or simply lacked understanding of the terms although the terms were fully disclosed and explained. For the government to claim that every mortgage lender failed to fully disclose and explain the terms of an ARM is preposterous. Sure, there are always bad apples in every walk of life and line of work, but to say that all ARM mortgage lenders joined in a conspiracy to fraud applicants is totally ludicrous.
Because some borrowers (and a few bad apples in the mortgage industry) failed to take responsibility for their actions, the government put the brakes on home loans for poor people. Now it seems they want to take away yet another financing option for poor and bad credit people: payday personal loans.
It's no argument that payday personal loans (also called cash advances) have a high interest rate in comparison to other legal bank loans. That's because of the risk. Payday lenders offer unsecured loans up to $1500 to just about anyone, with no credit check regardless of bad credit scores and even bankruptcy. Since these loans are often taken by bad credit borrowers, the lenders are facing a high risk of default. Complain about the higher interest if you must, but what's the alternative? Is your bank going to give you a $1,000 signature loan with no questions asked, despite your bad credit history? No likely. Is the government going to grant you a low interest unsecured loan with no cosigner, even if you have bankruptcy on your credit report? Again, not likely.
So what's an alternative to a payday lender? A loan shark? Not only would you suffer a higher interest rate, you'd also face potential bodily harm if you defaulted, or even made a late payment. Of course there are pawnbrokers who will gladly feed on economic tragedies.
Writing a bad check that will bounce is one way to gain more time, but look at the cost. The FDIC reports that the average bounced check amount is $66. For bouncing a $66 check, a person would pay an average of $27 in overdraft protection fees. Customers without overdraft protection would pay a non-sufficient funds (NSF bounced check) fee averaging $28.95, plus incur additional fees upwards of $30 from the merchant to whom they wrote the bad check. In comparison, if the person had taken out a $66 payday advance instead of bouncing a check, it would only have cost him from $9.90 to $11.22, and his credit score wouldn't take a hit for a late payment.
Payday loans aren't that bad afterall, are they?
Submit an easy approval, online application for a payday advance loan to get cash as fast as one business day, and review more information about unsecured personal loans for bad credit people.
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