People rely on instant loans without considering the consequences. According to many financial experts, the use of this financial product can be more of a problem than a solution.
Why People Like Online Loans
Before we understand why they can cause more problems, let’s take a look first why people decide to use payday loans in increasing numbers.
- No credit checks needed
- No faxing required
- No documents and paperwork
- Online processing
- Quick approval
Borrowers would never go for this kind of deal if it were other financial products. When it comes to a credit standing, that would be the first thing checked by banks and other lenders. Direct lenders on the other hand do not need it. People who have bad credit and are in need of cash fall back on safe payday loans with no credit check thinking they don’t have any real choice. All other means of getting cash quickly are unavailable options for them.
The Main Problem Borrowers Face
Those who use quick short term loans face the biggest hurdle which is the very high interest that they have to pay. Very high interest means higher than what you can expect from other types of loans. It could be in the range 200% or even as high as 700% when computed annually. Yes, the interest is that high. The terms are very short, usually a week or two but even then the amount added on to the principal that was initially borrowed could be substantial.
No Regulations in Most Places
The problem with instant payday lending is that there are no real government regulations concerning them in most places. That means companies get to charge whatever they want. They justify the high interest by saying that it protects them from the risk of lending to people with low credit scores. Some research has shown that such a claim is not really valid. The rate of default on online loans is lower than the rate of default on other loans.
Other Options You Can Use
The good news is that there are other options that you can use other than fast payday loans with no credit check. If you need some source of Western union fees quick cash, you can turn to something else. Here are some of the things that you can use in place of instant cash loans.
- Borrow from someone you know
- Get a cash advance from your work
- Sell something online
- Do some extra work
- Negotiate with your creditor
When you need the money to pay off a bill, then you can just negotiate and ask for an extension of the due date of the payment. You would be surprised by how willing they would be to strike a deal with you. Other options for raising money would be to sell things or take up a part time job. The good news is that you can do both on the Internet the point being that there are still a lot of things that you can do before you resort to quick online loans with no credit check.