If you think that you can come up with glamorous strategies to save money every month, overnight, then you would be wrong. You might as well be living from paycheck to paycheck at present and are striving to chalk out a proper monthly budget. No budget generally implies “no savings” and as a result you are left unprepared for meeting unforeseen expenses. What happens as a result? You either resort to the high paying short term loans or else turn to your credit cards for meeting urgent cash needs. However, please remember that aside from the high rate of interest, the pay day loans have other disadvantages, owing to which some countries are mulling a ban on the industry.
What are the Basic Demerits of Short Term Financing?
The high rate of interest is one of the basic demerits of short term financing. The APR might reach as high as 400 per cent. Now the borrower is given an option to roll over in case he fails to repay it for the first time. Now a loan extension results in very fast accumulation of rates resulting in the expenses spiraling out of control. Now as a potential borrower if you think that it is very easy to settle for a loan extension, and then think again. Will it be really possible for you to pay the loan during the second or third time when you couldn’t do the same for the first time with relatively lower rate of interest?
Now as you are forced to opt for repeated rollovers there are high chances of the lender getting trapped in a viscous debt cycle.
Another disadvantage of the short term financing is its easy availability. While many consider it to be one of the strong points, it actually results in indiscriminate borrowing. As lenders do not conduct proper credit checks, borrowers are often found getting addicted to these loans. They are often turning to its help without judging their needs properly. But it should be remembered that securing no credit check payday loans calls for a certain measure of maturity from the borrower’s end. As they are costly, they should only be considered when the financial need at hand is dire. You have to weigh your needs properly before availing them. They should be considered only when all other possible options are exhausted. However, it can clearly be seen that the sagacity is not exercised by borrowers. They are found addicted to short term financing.
Existence of Fraudsters
There are a lot of fraud companies that conduct the business of lending payday loans online. It becomes difficult to identify them as they look perfectly authentic. Its important to find their reviews on established review sites.
Author Bio: Sam Payn works as a professional freelance writer whose expertise in financial writing remains unrivaled at present.
Category: Short Term Loan