Payday loans. You either have used them before or you haven’t and you wonder why anyone would put themselves through the process of getting something with such a high interest over a short amount of time. However, until you’ve been in that situation, it’s not a good idea to judge. We never know why people have financial emergencies, but we do know that locally speaking, they have to be taken care of somehow. It’s tempting to assume that you’ll always have an emergency fund, but what if you’ve just been hit at once from all sides with problems? That’s not as rare as you think, unfortunately. As the economy worsens, people are realizing that their paychecks really aren’t coming in time to save them from emergencies. This makes the rise of the payday loan actually very likely, and also very problematic.
Banks are now getting into the trend, which can be good or bad for the industry at large. You see, having the banks get involved could mean a decrease in interest rates as consumers start demanding better services or voting with their feet. Competition can definitely be a good thing. Right now, the concept is so new that a lot of people really aren’t sure where they’re going to go, or what they’re going to do.
No matter what, you need to still shop around fro payday loans. The online companies are still killing it with not only good rates, but very fast service. In the world of payday loans, it’s not the person with the lowest interest rate that win, but the one that can fund the loan request in the fastest amount of time. It’s tempting to assume that you can just get faster service at a bank, but you’ll want to definitely ask. If you already have an account at the bank, it should make things easier but you would be surprised at how slow banks can be when it comes to your money.
Make sure that you always look at the fine print no matter what — knowing when you will be expected to pay back the payday loan is always important. Far too often people skip over this, only then having to turn around and try to roll the loan over or worse — take out another loan to pay for the second one. It’s these lapses in proper planning that end up making people leery about payday loans. When they are properly managed, payday loans can be a stopgap against complete financial ruin if you let them work that way.
Overall, are banks getting into the payday loan system a sign of a good call or a bad trend that’s only going to get worse? It really depends on your thinking, but we’re going to stay tuned before we make any fast judgments — that’s all we can do!