Everywhere you turn, there seem to be headlines about payday loan regulations and concerns about whether payday lenders are predatorial service providers.
However, amidst all of this criticism and negative judgement, many media outlets aren’t considering both sides of the coin and are usually portraying these kinds of loans as a complete waste of time. In fact, they are often the only funding option for individuals with poor credit. To truly view the industry from a journalistic perspective, it’s important to also mention the positives that payday loans provide for a large segment of the population that cannot access traditional forms of credit.
Are the Critics Comparing Apples to Oranges?
With all of this talk about how high the interest rates are for payday loans, one would think that the comparison is pretty cut and dry.
However, comparing no-credit borrowing options to credit or loans provided by banks and credit card companies isn’t really a fair or sensible comparison. Think about it this way: if a person lacks the credit needed to apply for conventional personal or small business loan, then those options are already eliminated by means of disqualification; they are no longer even part of the comparison. At that point, online payday provided by lenders like loanpigusa.com become the most ideal alternative.
Aren’t Payday Lenders Justified in Trying to Mitigate Risk?
It’s important to understand that payday lenders aren’t charging exuberant interest rates simply because they want to be greedy.
They’re trying to offset for the significant percentage of borrowers who are going to default – remember that they’re usually dealing with people who have already defaulted numerous times in the past in order to have bad credit to begin with. In this way, the terms ensure that the bad apples don’t ruin it for the entire tree, as each borrower pays a premium to make up for the fact that some won’t be able to make repayments.
Why Does the Media Paint Payday Loans in Such a Negative Light?
One doesn’t have to be a conspiracy theorist to buy into the notion that banks and other lenders don’t like competition of any kind.
Traditional institutions have become so successful because they lock borrowers into long-term loans and arrangements. Payday loans provide a short-term alternative that runs completely contrary to the scheme of lording over a significant portion of the population through the constant burden of student loans, mortgages, 5-years loans, and other long-term deals.
Are Long-Term Loans Really Better Than Short-Term Loans?
In closing, the vilification of payday loans really comes down to one thing – the debt trap.
Without a mound of long-term debt strapped to your back, you essentially don’t need to pay the banks and big lenders anymore. Obviously, such institutions have a clear incentive to promote content and headlines that discourage the use of any alternative that allows people to take a different approach such as short-term loans payable by the next pay date. It is one way to prevent racking up an uncontrollable amount of debt and obviously not something many lenders want you to avail yourself of.