Consumers be wary of payday loans
23rd November: Consumers must be wary of seeking payday loans and must go for such an option as a last resort.
This warning has been issued by the director of the Debt Support Trust, Stuart Carmichael.
Payday loans mean high interest rates, huge debt—No doubt, many of us would find it convincing to get payday loans to get ourselves out of tough economic conditions.
But, such loans could not just mean paying exorbitantly high rates of interest but could also push you into heavy debt. Payday loans are ridiculous.
So, people must make endeavor to stay within their financial limits although it might be quite difficult keeping in view the current cash-starved times, adds Mr. Carmichael.
Such payday loans must be paid back well on time. Moreover, the best thing is to use such loans only sparingly.
People need to know and acknowledge the full cost of repaying payday loans when going for such borrowings. If anyone gets trapped in the web of payday loans, he or she might be compelled to live a life full of stress leading to conditions of anxiety, insomnia and depression.
According to communications manager of non-profit group named Center for Responsible Lending, Ginna Green, borrowers of payday loans including car-equity loans are not just made to pay high interest rates but are even at a threat of losing their car in case they find it difficult to make payments on time.
She added that efforts are going on to eliminate such financial practices by clever money lenders. Although, such financial providers make huge claims of providing a wonderful service to the borrowers, but on the contrary, the service being provided by them is nothing but a debt service, reveals Green.
The sad thing about payday loan companies is that there is no limit on the rate of interest to be charged by them. So, payday loans and car-equity loans are really risky.
The worst thing is that companies offering payday loans want to trap borrowers who can’t pay back their bills.
So, they have to borrow another loan to pay back the previous one. And that’s how they become trapped in a vicious cycle of loans
High-tech Payday loans—To keep a curb on such happenings, an online US start-up firm is planning to provide small loans to borrowers having poor credit scoring. Named ZestCash and founded by Douglas Merrill, the company is not a payday loan firm. It has a different model altogether.
Default rates of ZestCash are nearly half of other payday loan companies The firm will verify its potential customers by their signatures online to know whether the customers can pay back their loans or not.