While the payday loans industry has been around for a number of years, in the world of lending it is still a relative newcomer. Given the nature of this type of lending practice, those who offer these services have been treated with far less respect than most other types of lenders. The payday loan industry has long had a reputation for high interest rates, short payback periods and stiff penalties for those who fail to repay their loans by the due date.
Is the bad reputation deserved?
Whether or not this reputation is deserved should not be based on the industry as a whole, but rather on each individual lender. As a consumer, it is your job to thoroughly investigate any company that you are considering borrowing money from to ensure that they are legitimate and offering terms that are acceptable to you. The lack of research by consumers may in fact be one of the biggest causes of dissatisfaction among those who make use of this type of loan.
Clean up your act or else
While there are lenders offering payday loans with less than attractive terms and whose practices might seem somewhat questionable, this is not always the case. Depending on where you live, you are going to find that laws concerning this type of lending have been enacted to help protect the consumer. These laws cover important details such as interest rates, length of time for repayment and any penalties that can be assessed when a person is late on their payment or unable to meet the payback date.
Given these changes in the laws, the pay day loan industry has struggled to improve its image in recent years. No longer is this industry the bane of the banking world, in fact many of these lenders have become trusted and respected businesses. But this does not mean that you should go blindly into borrowing money from the first lender you find online or in your local town. In fact given the plethora of these lenders, you need to be more careful than ever.
Do your research
As with any type of loan, if you are planning to borrow money, it falls on you the borrower to do your homework. Using the Internet, you can research any company you are considering borrowing money from. This will allow you to see what others who have borrowed from them have to say about their lending practices, the interest rates they offer and any problems they may have had. Keep in mind that these are intended to be short term loans and as such do tend to carry a higher interest rate.
For most people who take out payday loans, the problems they encounter are less likely to be with the lender than with the fact that someone failed to read and fully understand the terms of the loan they signed for. If you find yourself in a situation where you need to take out this type of loan, you need to protect yourself and read every word of the contract before you sign it.
Despite the plethora of bad press these lenders have received over the years, there are many that offer a first class service when you need money for an emergency situation. It is up to you to find a reputable lender to borrow from and to avoid any that are less than scrupulous in their business practices.
About the author
My name’s Jane I enjoy writing on all things finance and business, I also happen to be a business reporter here for things like this.