In the press these days payday loans have been getting a lot of negative feedback, with the seeming high interest rates and charges, the media have accused these companies of exploiting the poor and needy and just being an all round bad deal. However is this true? At first glance it seems like it is, you look at the interest rates and see APR's in the thousands of percent, meaning that if you took out a payday loan and didn't pay it back you would be paying thousands of times what you actually borrowed. If you were paying back over the course of 12 months or more it would indeed be a rip-off, but the fact that so many critics of payday loans miss is that you don't pay it back over the course of 12 months. In actual fact, with most payday lenders you only pay the loan back over the course of a few days or a few weeks. This means that the rate that is plastered all over the TV screens is misleading, you will never pay that level of interest as you are paying it back in a few days. While it is true that these charges are still high compared to a traditional loan, there is one very good reason why these charges aren't high for a short term loan; they are better than the alternative for most people. If you are in a position to need a payday loan, then you are probably in a position where bank charges or credit card default charges are a real possibility. In these cases, the interest charged on a payday loan will be a lot less than any potential bank charges, not to mention preventing the potential damage to your credit rating that defaulting on credit cards can provide. There are two sides to every story and the attacks on payday loans are ill informed and pointless. Everything has its place in the market, even payday loans. Yes, if you are going to get one to spend money that you don't have, then you are going to get charged a lot more interest and charges than you would have done if you had spent on a credit card or if you had saved up, but if you are in desperate financial need, payday loans can help get you through a tough time without having to damage your credit rating or relationship with your bank. In this case, they are not a rip off.
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