What is payday loan?

Posted in Finance

What is payday loan?

The payday loans are considered as a good way that enable customers to cover their small expenditures  by easy way , without facing a lot of banking formal procedures like others long term loans , so it’s considered as a good way for short term settlement .

Why to use payday loans?

1-No one can deny the payday loans play an important role specific for the cash-strapped families, which they need additional source of income for settlement of the necessary monthly bills such as the electricity and water bills.

2- The easy banking procedures of payday loans, so that,  if you need to get the payday loan , you have to present only yours a social security card , the number of your bank account , your private driver’s license and evidence of your income per month.

3- The recent statistical survey in USA is indicated that, there are 12 million borrowers borrowed around $50 billion per year through the payday loans.

This ratio is indicated that, there are a large numbers of American individuals depend on payday loans for covering there essential daily expenditures.

The disadvantages of the payday loans?

1-The  very high interest rate charged by lenders ,which hinder many borrowers to settlement the payday loans additional to its interest ,in some cases , the borrowers are forced to take second loan in order to settle the only the interest of  payday loans , unfortunately, at the end ,the borrowers will  fall  in endless cycle of debt.

2-the interest rate charged on the payday loans is greater than the interest rate on others kind of credit card loans such as( home mortgages loans and auto loan….ect) by35 times, so that , it has a negative effect on the American macroeconomic system.