A payday loan is generally a fast and easy way to get cash quickly for unexpected bills or emergencies. These loans are backed against your next paycheck and usually run in the 100 to 2000 dollar range. These loans, however, also come with very high-interest rates around fifteen percent. Many oppose these payday loans online on the grounds that they are predatory and detrimental to society. However, payday loans have also proven to help people and improve their economic standing.
Payday loans often have interest rates above 15%. Some even reaching as high as 500% for a two-week loan. Government officials have realized the need to cap these rates and in order to keep these interest rates checked many states have set laws to regulate the maximum percentage of interest that can be applied to a loan. Some states have even gone so far as to completely outlaw payday loans altogether because of the negative effect such loans have on the economy, especially in low-income areas. This is because the people in low-income areas often don’t have the means to qualify for a larger loan from big banks or credit unions. The higher interest rates put an economic strain on the class and start to deteriorate, rather than help the area. The assets of the area drain and government aid are then needed to sustain the people there.
However, when not used on a regular basis these loans can be very useful for unexpected events such as car accidents or emergencies. The loans have even proven useful in disaster areas, helping people still in work to recover their ability to support themselves and continue living as they had. This method means that government or disaster money is not needed and can then be used to support the harder hit areas and help the area to recover more efficiently.
Payday loans have a place in society, to be used sparingly and only in a bind. By not abusing the loans, they rarely have a negative impact on families and their assets. The loans can keep you on the road and at a job, which benefits society as a whole.