Payday advance loans have long had negative connotations with those who do not need to use them, but there are unquestionable benefits to these short-term financial products, which have flourished both online and on the high street since the credit crunch spelled the end of cheap credit and upset the financial stability of many millions of workers around the world. What are the unquestionable benefits of payday advance loans?
The first unquestionable benefit of a payday advance loan is the convenience factor. With cash running short a few days before payday, you can simply walk into a retail branch or log on to a website, and you could be holding a cheque or cash in your hand within minutes, or watch as the money goes into your bank account online. This is a lot more convenient and less embarrassing than approaching the boss for an advance on your salary, or phoning around friends to borrow a bit of extra money. It could also avoid embarrassing questions about how you chose to spend the last pay packet!
Although critics view payday advance loans as part of the slippery slope to being trapped in debt, thinking they encourage poor financial management, this is a rather patronising point of view. Payday advance loans can actually help people avoid debt in the form of overdraft charges and late payment penalties on their other financial commitments. Workers who are paid monthly might be perfectly adept at handling their finances, but have one weekly expense, such as a travelcard or even just the weekly grocery shop. They might budget for this carefully, but occasionally the calendar will ensure there are five weeks rather than four between paypackets, and there just isn’t enough cash in the bank to cover that extra payment, which might only be due a day before payday.
If used correctly, payday advance loans are one of the cheapest sources of credit still available. Yes the interest rates can be punitive, not to say eye-watering, but that is because lenders are business looking to make a profit on what is SUPPOSED to be a very short term loan. You take out a payday advance loan, you get paid maybe three days later, you repay it. The level of interest will be high compared to your mortgage or credit card (if it isn’t, you might need to look at getting a better credit card deal), but the whole point is that you pay it back as soon as you are paid to prevent much interest from accruing.
Payday advance loans are available to just about anyone, and although the perception is that they will be taken up by lower-paid workers, the fact is that more middle-class professionals find cash tight towards the end of the month than they care to admit. Perhaps their funds are even tighter, given that they are more likely to be mortgaged to the hilt. Payday advance loans offer a simple, uncomplicated alternative to spending the last three days of every month living on ramen noodles, or of putting off essential car repairs until the following week.
Payday advance loans will always have their critics, but the truth is that they are just another financial resource available to workers having a spot of trouble managing their money. They are not appropriate to everybody, as everybody’s situation is different, and you must be sure to read all the terms and conditions before commiting yourself to anything, but with the speed, convenience, affordability and universal availability of payday advance loans, it is clear that they have unquestionable benefits to consumers.