Why don’t payday lenders provide payday loans for free? This is a ridiculous question, but high rates are the most frequently asked question and concern, when payday loans are discussed. The answer is obvious and simple, of course. Lenders have bills to pay and need to make a little money as well, which is the same as any other form of commerce. Due to the higher risk they take, they also need to cover their losses. Do you think you pay too little for insurance? Probably not. When insurance companies suffer huge losses, they increase their prices to remain profitable. It is just part of the cost we pay, just as it is with short-term loans.
Now the other thing that payday loans are often criticized for is a circle of debt. It happens because of the concern that once someone starts to borrow against future income, they may have financial troubles. If anyone needs more money than they have right now, it is difficult to return to financial health. Once people begin to use credit for things they need, they can get into trouble when the bills start coming due.
Does it sound familiar? It really does, because payday loans work just as credit cards, only faster! If anyone sees the last pair of fashionable boots on the way home and it only costs $ 120, should they skip their morning coffee for a few weeks to save and buy them? Will they wait two months to buy the boots after they go out of style? Or will they take their credit card, run to the store and spend $120 plus added interest? You know the answer.
And this is what payday loans and credit cards have in common. When you do not have extra money and you accidentally drop your smart phone, and the display breaks, you can use your credit cards or payday loans. The choice depends on your situation, because payday loans are granted immediately and effortlessly.