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Payday loans are an alluring but controversial way of sorting out emergency needs of cash. Why do people take payday loans? Usually it is because they have an immediate need for cash that cannot be met in any other way. It is these cases of dire need, where there are no other alternatives - such as having to pay for a medical emergency that may not be covered by insurance - and where the cash is needed in a real hurry that payday loans are handy for. They are usually only available to people who are in employment and therefore have a regular income coming their way, hence the name payday loans since they are supposed to be paid as soon as the borrower receives their weekly, fortnightly or monthly pay. A lot of the times these loans are taken at such short notice and with almost no pause for thought as to how they will be paid and the consequences of not being able to pay them on time and in full. Most borrowers do not even bother to read the small print showing the interest amounts that are payable and, most importantly, the consequences of delays in the repayment of the loans. Payday loans are usually made out to be an easy and attractive option by the lenders. They insist on harping on the ease with which these loans can be acquired. You will get the money - in cash - within the hour. You do not need to have any security to get the money. You do not have to go through a lengthy credit appraisal process. All these are trumpeted over and above the finer print in their contracts - indeed some of them do not even have contracts - just a quick online authorisation and the transaction is done. The money is quickly in your hands. The interest rates charged on payday loans are usually extremely high - varying from 300% to even 1000% per annum depending on the duration of borrowing which is typically a couple of weeks to a month. In addition to these there are other penalties and processing fees that are usually very cleverly hidden in the fine print and which borrowers are never given time or a chance to think about or give serious consideration. There is usually a penalty for any delays in the payment and other penalties for non-payment that, together with the interest keep spiralling and compounding the longer the payment is delayed. No one points this out to the borrowers at the time of borrowing. All the lenders do is insist that this is really "easy" money - but sadly the repayment of payday loans never is.
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