Payday Loans Research Paper

Description: Payday loan can be availed from the internet as the companies now provide the online facility. Thus the borrowers do not require visiting the lender individually to get the loan.

The main problem that most critics have with payday lenders is that many people recycle their loans and become trapped in cycles of debt. Some people use the loans irresponsibly or get loans from multiple lenders to buy things that they don't need or to enable unhealthy personal habits. These loans were never intended to be used in these ways, so some people get in trouble. The same holds true for all kinds of

Because of this nasty lending cycle, payday lending is illegal in 15 states, and is regulated elsewhere. In some states, borrowers are only allowed to take out a specific number of loans per year. In other states borrowers can only take out a specified number of loans at a time, and after a certain length of time the lender must lower the interest and extend the term so the borrower can get out of debt.

Description: Payday loan is the type of loan which is generally taken by the borrower at the time of emergency.

In the article “Me, The Other Scott, And Payday Loans” by Scott Gilmore, the author is furious to find that most people are being drained out of money they don’t have. In my opinion, I agree with the author. I do not think it is right for Payday loans to be tricking people with little to no assets to pay for an amount they cannot pay back. According to the article, annual percentage rate is more than 540, while loan sharks charge double that. Loan sharks will gladly extend the loan for two more weeks, that way they can charge more interest rate. Stan Keyes, the president of the Canadian Payday association argues that “It is unfair to calculate the interest rate this way, since the loans are typically for two weeks. However he concedes that

Americans who need a short term loan to repair a car, fly quickly to a stick relative beside or catch up on child care payments even find themselves going to payday lenders ether online or trough one of the thousands of payday lending store fronts. (Wherry) using online is a way to pay or catch up with your due date of the payment that you owe. Having someone that can help you with a payment is a payday lender that can help you with a car payment also paying your rent or buying food or also buying a new sofa. Nationally borrowers spend roughly 8.7 billion per year on payday loans fees and what might start as a 500 lifetime can become a heavily burden. (Wherry) having a borrower that lend you a loan can be easy but it’s time to payback that is when it became complicated. Also having a fee is very complicated because they pressure you to pay back when you miss your due date. Annual interest rates for payday loans typically run between 391 and 351 percent a cording to the center for responsible lending and most people who use them end up paying more in fees over the course of the year than they originally received credit. (Wherry) annual rates are very high in percentage because of lending tem money and not paying back on the due date. Having these huge percentages are too much but when you borrow more than you need the more you ending up paying than the last

In my opinion, I believe that loans are good for people who can borrow money and pay the company back as soon as possible. Those who do not pay them back receive an increase in interest every time they miss a payment. Targeting people who have a low to moderate income, payday loan companies are in the areas that these individuals live in. As Gilmore says, “A recent study by St.Michael’s Hospital in Toronto found a correlation between the number of payday lenders in a neighbourhood and premature mortality”. To avoid falling behind on payments, young people can seek for help to reduce stress. In conclusion, I think that

In the article “Me, The Other Scott, and Payday Loans” by Scott Gilmore describes the negative impacts payday loan companies can have on people who are not fortunate financially. Payday loan companies loan money to people with low income who are need of money, but the interest is 10 times more than it would be at a bank. I think this type of method of loaning money is not helpful because in return they ask for more. It is interesting to know that many are still following and using this type of banking when they are aware of the circumstances it has. It is however true that when people are need of money, they will use any way to solve their problems, as it is also stated in the article “These are respectable people with jobs facing an unexpected

You probably have seen the ads on the internet: payday loans or cash advance loans are "the rage" of the consumer financing industry these days. When I say "rage" that term is appropriate as the rates charged for these types of loans angers many consumer advocates. Should payday loans to be avoided at all costs or are there situations when these types of loans make sense?

Payday loans can be addictive because they 're readily available and easy to get, so people turn to them often when they need cash to tide them over during financial emergencies. Unfortunately, these loans were meant only for short-term, emergency cash needs and carry high interest rates to keep them available to everyone--even people with bad credit. These loans, which are meant to be repaid from the next paycheck, can trap people in cycles of debt and become addictive. When financial needs arise, people can just apply for a payday loan and get money within a short period. The simplicity of the process can result in people ignoring their own best interests and applying for short-terms loans every time they come up a little short or want something that they can 't afford and shouldn 't buy. Payday loans--like credit cards, gambling and shopping--can certainly be addictive if borrowers aren 't careful to use the loans as intended.

Regardless of what you have seen or heard about getting a payday loan, they will need to verify your employment. Although it is true that your credit rating is unimportant, they need to know that you have a job, and the amount of money you earn. A lender may claim that you can get a fast approval, but you will quickly learn that it is pending verification of your job and

Professional financial advice should be regulated by the government before they get a loan. According to Scott Gilmore’s report: “there are more than 1,400 payday-loan outlets across the country. They primarily target people with low to moderate income and no assets.” Charging murderous interest for low income people who does not have financial base is not just morally wrong it will put them deeper into a hole. The interest rate for the payday loan is over 500%, which means Scott will end up losing 5 times of the amount he borrowed from payday loan at the end of the year. This is a significant problem, for society. Since low to moderate income people are borrowing money from payday loan. Polarization of wealth will become more serious if the

I enjoyed reading your discussion post this week Clint. It is apparent everyone has a slightly different opinion about payday loans and the amount of interest that should be allowable. My assumption would be that most people obtaining payday loans are probably using them as a last choice to obtain needed funds. While there is an abundance of people who are unwise with the use of their money, likewise there is an equal number unable to obtain adequate employment at a livable wage, or have gotten behind because of a personal emergency. These people often live from paycheck to paycheck, and many work more than one job in an effort to pay their expenses, not necessarily due to their mismanagement of money.

Although the best way to avoid going into debt is to avoid borrowing money altogether, the truth is sometimes borrowing money is the only option available. Whether borrowing from a family member or lender, it seems like most people have had to borrow money at some point in their life. Borrowing money can be intimidating and stressful but it does not have to be. Payday loans are a tool that can be used to help you during challenging times. When used appropriately, payday loans can make borrowing money painless.

Take out the loan and pay it back with your next paycheck. On the surface it sounds like an appealing alternative not having electricity or food for the week. The downside comes in the fine print. According to Check Into Cash’s website, a single payment $100 loan can result in 260.71% to 782.14% in interest. I may just be a college student, but I can see that this kind of lending is both predatory and nearly impossible to repay. This is why payday lenders are often referred to as “predatory”, because they prey on the short-term needs of their clients to create long-term returns that in many cases never go away. As mentioned earlier, this is not a phenomenon of the late 20th century, rather it is merely a rebirth of an industry that thrived during the Great Depression. During the Great Depression loan sharks charged from 240% to 1000% for short-term loans, sound familiar? When the interest rates are this high they are referred to as “the purchase of wages” because what the institution is effectively doing is purchasing the future wages through this high interest rate. This begs the question, why do they exist, what economist world view calls this mode of financing productive and fair to the markets, what are the benefits?