Payday Loans - Are They Corrupt or Legit?

Are payday loans corrupt or legit? This is the request consumers are request themselves these days.These loans are a valid form of credit and no ifs ands or buts a good choice than going to a loan shark. But why then are some citizen calling these loans corrupt?

According to buyer Focus, the number of citizen taking payday loans has more than quadrupled since 1996, and they remain to be a favorite form of credit. It seems that the question is that there needs to be a limit on the number of loans citizen take out and how many times they are allowed to roll the loan over. And therein lies the problem.

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It's not that payday loans are corrupt, the question is that consumers cannot make their money last till payday and they are taking out loans that they cannot afford to repay, and then taking out other loan on top of the old one. The suspect why payday loans are being targeted as corrupt is because of the higher finance charges.

Payday Loans - Are They Corrupt or Legit?

But why are payday loans more expensive than other loans? The suspect for that is the lenders take a high risk advancing these loans by:

• Asking for no collateral to secure the loan;


• Performing no credit checks before advancing cash so there is no way to manufacture the credit worthiness of a borrower.

Any high risk loan attracts a higher interest rate with any lending practice whether it be straight through a bank or a secret finance company. And in most instances a borrower is refused credit if they have bad credit, and this is probably not a bad thing.

If consumers borrowed responsibly then there wouldn't be a problem. Consumers are asked to take out One loan at a time, and Only if they can afford to pay it back with their next pay check. They must not take out other loan until they have repaid the first and not roll the loan over. This is where the costs start to creep up on consumers and in six months with no repayments their former loan could have doubled.

Payday loans are short-term advances on your wages or wage and should be treated as such. Abusing the principles is giving the payday loan manufactures a bad name which it doesn't deserve because many consumers need to use this form of credit in the current economy.

Payday Loans - Are They Corrupt or Legit?