Payday loans are quite possibly the most heatedly debated financial service in existence today, unless we count certain very specific financial services that are too esoteric for the average person. However, payday loans are something pretty much everyone is aware of and they are also something that everyone has an opinion on, which is quite understandable when you consider how specific they are.
First of all, there are people who believe that payday loans are designed in such a way that they just make the poor even poorer while the lenders earn big bucks by charging exorbitant interest rates. And while it is true that one can get in quite a lot of troubles if they use payday loans for stuff they are not meant to be used for, the truth is that there is simply no other solution in certain cases. Also, touching on the whole poor people getting even poorer subject, the research has shown that the people who most commonly take out payday loans are actually from the middle class.
Also, it needs to be said that the payday loans come with interest rates that are very high for a reason. Namely, he default rates (the percentage of times the borrowers do not repay the loan) are much higher, very much higher than with other forms of loans and the lenders simply have to cover for their losses somehow. Also, when you consider that the payday loans are supposed to be paid back very shortly after taking them out, it goes without saying that high interest rates are necessary so that the lenders could earn some money.
To show you how controversial the whole payday loans issue truly is, it is enough to tell you that there are states that have deemed these loans illegal and where you cannot get them. We do not think this is very prudent as it prohibits people from doing something they should choose whether to do or not do. And in the end, if someone needs a quick loan, they will get it, one way or another. And isn’t it better that they borrow money from a regulated business than from shady characters with even higher interest rates.