By: Phillip Eubanks
The mystery of the payday loan. Is it a good idea. Is it a bad idea? Do I even know what it is? These can just be some of the many questions a person might have when contemplating acquiring one of these loans. These questions are a valid worry for any possible recipient to take into consideration. So lets start with square one… What is a payday loan.
A payday loan is a short term borrowing of money to be repaid by the recipients next paycheck. As with any loan, the exact amount will vary depending on a persons pay and amount they are asking to borrow but the paying style is the same for all. Unless designed to be received through a direct deposit and taken out directly from an account, one will receive the money in person which will give them the responsibility to come in on the next pay day to repay the amount borrowed plus some. Of course, in order for the lender to make any money, the borrow will have to pay more than they borrow which with any other type of loan would be considered interest. For example, a recipient might borrow one hundred dollars. This money could be to pay for an unexpected emergency, could be used to pay for gas for the recipient to be able to drive to work, or to buy groceries for him or her and their family. The amount they will pay back would not be one hundred dollars, however. That amount could be anything like one hundred and fifteen dollars. Now that we have covered the basics can we truly be able to understand if a payday loan could be a good or a bad idea.
The essential idea is good. Get paid now pay it back whenever you receive your next paycheck. What is the harm in that? The problem is that some people use this money to pay for something they need now that they can not afford at that moment. For a careful spender this could be an accurate reason which will benefit them. In this case the payday loan is a good option. With what seems to be a growing number of the American society, however, is that we are not careful spenders. We have a tendency to mistake wants for needs and carelessly spend any money available to us. This specific example is a bit extreme but is a true problem. Since they spend all that is available to them without considering necessary expenses like the payday loan itself. When a person cannot pay for the loan further fees come into play which leads the borrower into further debt. Is the system really at fault for this though? Like everything else I have previously stated it would all be how you looked at it. My personal opinion says no. No matter how hard you try, there will always be faults in your system. There will always be cases that the “system” is to blame such as a hard worker borrowing money for an emergency then almost immediately losing their position. If they are not able to work up the money to pay them back then the system just throws them further into the hole. For the most part, though, if there is any blame to be taken for the faults it should be placed on the irresponsibility of borrower. Any system that is abused will have bad results. People are quick to blame the system and slow to blame the consumer.
In Conclusion, I believe that this loan has its problems just like any other program. There also might be better ways for this program to operate as well. With responsible spends this system can be really helpful, however. This is why the PayDay loan is able to help the needy and therefore can and does work. Thank you for your time and for this opportunity.