The Controversy of Payday Lenders

Some states, such as North Carolina, have kept payday lenders from doing business within their state. Law are different from state to state, however, payday lenders can still operate on the Internet to continue to provide services for those who do not have other financing options available to them. Even though local lenders may not be around, many have found that online payday loans can provide them with the same service they had come to expect from a local lender, with the added convenience of being able to apply from their home or office.

Although some states believe that the interest rates on payday loans are too high, the market for these types of short-term cash advances continues to be a necessity for those who have a no, bad or poor credit history or those who have few other options for borrowing when an emergency strikes. Ultimately, the consumer is the person that decides whether a service can help them in their financial time of need and most do not want to be told by others how they should or should not get and spend their money.

Many people turn to payday lenders because they do not have other lower-interest forms of short-term cash options like credit cards or other financing options. For example, banks don't find such small loans profitable enough to fund, so they do not offer this service. Or if they do, the rates are very high. Also, banks tend to want some type of collateral or credit history to judge the amount that will be given. Another alternative which most people decide against is borrowing from family or friends.

Often, people are embarrassed to ask friends or family to help tide them over and prefer to seek financial assitance with a business instead. The payday loan industry offers a great service to a population of people who have few options to fund short-term emergency cash needs. By giving out an online payday loan, these people can often avoid multiple late charges on bills that are due. Often, the charges that would result from late fees or overdraft fees from a bank would be more than the cost of the online payday loan. The payday loan serves as a function to avoid late fees, which can outweigh the total cost of the higher interest rate.

Contributing National Payday Staff Writer

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