Also termed as quick loan, short term loan or cash advance, the payday loan is quite useful when one’s monthly income is to some extent insufficient to meet one’s everyday expenditure. How to bridge the gap without falling into the gloomy loop trap of indebtedness? Business loans often have a larger minimum; often higher than what is required by the applicants and largely above the consumers’ repayment capacity.
The requirement of a letter of application, coupled with a compulsory credit score check make the loan application procedure lengthy and expensive. In addition, the terms associated with a personal loan, a long term loan or business loan are often a barrier for the common loan consumers. On the other hand, the non requisite of background credit score check, online or fax document submission facility, easy approval and next day disbursement characteristics make payday loans more reachable and apparently affordable as compared to other existing loan schemes.
Consumers of payday loans are often supposed to be from the lower socio economic class who are left out with limited options over existing types of mortgages. However, with the recent worldwide economic crisis and rising inflationary gap, even people from the middle class segment; including small and medium business owners are turning towards considering loan payday or cash advances. This rise in demand for payday advances are encouraging the coming out of loan sharks whose ambitions are exclusively profit making; through the imposition of excessive and aggressive interest rates. This causing much more harm than good to the loan applicants in nowadays deprived societies, some states and countries took the brilliant initiative of regulating this flourishing industry through the vetting of legislations.