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Here is a complete lowdown on what a payday loan is

Harrowing statistics:
The Federal Reserve has come out with statistics that has made everyone sit up and listen. According to the number crunchers, more than half of the population of the developed countries like the US and the UK live from paycheck to another paycheck. There are two likely implications of a statistics like that. First of all, it breaks the myth that in an educated and developed society, the standard of living is extremely high. Secondly, it comes as a surprise that while the society at large is considered to be very rich, the majority of the people are scraping through month after month. By any unforeseen circumstance, these people happen to lose the job that they are holding, it can wreck havoc on their finances and how?


The case of losing the job that he holds:
The condition in the westernized and first world countries is a case of the famous adage that says, the sum of the whole is always greater than the sum of its parts. So, even thought the nation as a whole is fully developed, the people individually are left to fend for themselves.


In an emergency:
It is scarier to think of the condition of such people in the society in case a calamity or a disaster strikes!
When a family is living from paycheck to paycheck, it is obvious that he is using up all the month’s earning in providing for itself and there is either too little savings or no saving at all that can be managed in such a situation.


The society is always extolling the virtues of saving:
In a developed society, right from the layman on the streets to a blogger to a Harvard educated economist, everyone is extolling the benefit of saving even if it means saving as little as one dollar a week. How ironic can the situation get when people have just enough to tend to their basic needs, we as a nation are giving speeches from high podiums, writing winning essays and waxing eloquent about the need to save for a rainy day!


Here is something that can save your day:
Let’s take a hypothesis: Mr. A earns a paycheck of 2000 dollars out of which he spends 1500 on rent, food and clothing and other maintenance. Remaining five hundred goes for miscellaneous expenses like education, social activities etc. Now, Mr. A’s car breaks down leaving him with an expense of 250 dollars. Mr. A is searching high and low to be able to foot the bill and get his car repaired. But try as much as he can, he is not able to meet the expense.


He goes to his friends and family but unfortunately they cannot help him much because they are also sailing in the same boat as him. They also have just enough to last them the month. When Mr. A approaches his employer, he refuses to part with any advance amount sighting that the recent  recession is stopping him for helping him even though he understands that Mr. A does have a genuine need.


The problem solved:
Now, by chance, Mr. A comes to know about the payday loans that are available in his locality and tries to get more information about it. The proposition that he will get cash for repairing his car is just too tempting and he ends up at the center too soon.


The case for a payday loans
A payday loan is something that can come handy in sticky financial situation as that of Mr. A. a payday loan is a short term loan that is sanctioned for small amounts without any collateral security being furnished. There are no long drawn procedures for the sanction of the payday loan but the only condition that is given in an expressed form is that the loan amount will become due on the exact date of paycheck that will come subsequent to the date of the borrowing of the loan.


Criticism:
Even thought he payday loan can save your day and help you tide over the small difficulties in life where financial crunch can create bothersome situations, still the payday loans are under much fire due to the fact that the rate of interest that they charge are much higher than the loans that are available in the open market.


The fact that the payday loan is an easy and less cumbersome way to get hard cash albeit even in small quantities along with the fact that there is no fee or hidden cost and there is no long drawn procedure or waiting to get cash, a lot of payday loan borrowers do not mind paying a little extra in the form of a premium interest. After all what matters is that they get the money when it is needed the most.

 

 

Short term loans