Payday loans have come in over the past few years as a saviour of people whose monthly expenditures exceed their salaries all across the world. These loans are characterised by fast processes, easy qualification requirements, staggeringly high interest rates and high penalties for failure of payment. The interest rates charged o these loans are usually way higher than the agreeable market interest rates and, in some states, have even been banned as a result. These loans also fetch borrowers very high financial penalties in the event that they fail to pay them. This is because a very high roll over fee is usually charged periodically in the event that the payment period expires without one honouring their loan. Payday loans have several known advantages and disadvantages and it is usually up to the borrower to decide whether or not they are worth it. one of their major disadvantages is the fact that they are highly addictive to the borrowers, almost like gambling. Once you successfully pay and clear your payday loan successfully, you may find yourself turning back for more even in situations where they are not very necessary. This costs people a lot of extra money that they would otherwise avoid if they were financially disciplined. There are several factors that have contributed to the widespread prevalence of payday loans and they include:
Late payments and delayed salaries- In some situations, it is usually very difficult to help themselves because of delayed salaries or late payments. It is usually very unpredictable whether clients and employers will honour their agreement to pay you at a certain time due to various unavoidable circumstances. Therefore, even people who stick to their monthly budget can find themselves in financial trouble whenever their salaries are delayed. This in turn causes them to turn to payday loans as a source of money to take them by while they wait for their salaries and payments.
Failure to budget properly- Financial budgeting is one of the surest ways to avoid a financial crisis in any scenario. However, some people find it very difficult to stick to the budget they had put in place because of impulsive. It is difficult for people to maintain their discipline and spend within their financial constraints. Once one has over spent impulsively, they often find themselves out of money long before their payday is due. As a result, they are forced to turn to payday loans as a quick solution.
Financial emergencies- There are certain unforeseeable circumstances that can cause you to spend money you hadn’t planned to spend Cashmax’s St. Clair. Financial emergencies come in various ways eg thefts, fires, sickness, or certain needs by a loved one. Once you have spent money on these emergencies, you often find yourself falling short of your budget and then you are left with one alternative which is to turn to payday loans.
These are some of the factors that lead to the prevalence of payday loans.