Paycheck advance loans are always in the news. If there isn’t a new regulation being proposed, a tale of a customer’s finances gone awry or a company sued in the courts writers will still find something to talk about when it comes to short-term paycheck advances online. How do you view the business? The opposition looks at the service as businesses looking to take advantage of low income customers. Those who are for the payday loan service appreciate the option; it gives the freedom of choice. When there is no place left to get money help, wouldn’t you want some door to open?
Once upon a time, there were unregulated private lenders, also known as loan sharks who provided high interest loans to those in need. Nowadays, companies provide short-term loans based on qualifications. These businesses evolved from loan shark opportunities to safe paycheck loans online through lots of trial, error and regulations. The demand is there. Customers want the option; they need alternative methods to help solve small money problems.
Banks and credit unions joined the paycheck advance business providing customers their own version of a short-term loan. The idea was to provide access to fast cash to those who had active accounts. Many people liked these loan options since it cut out the research of finding a safe payday lender from the bunch of lenders. There were successful loans processed, but there were also failures. The banks’ customers were finding similar problems to those with failed payday loan companies. The payoff was still a burden to those living paycheck to paycheck. In recent news, three of the larger banks are now pulling out of the short-term loan business. They will no longer offer this type of service to customers. Why? It wasn’t because there was a lack of business.
It seems that customers who use a bank’s services still had trouble repaying the loans. There was a cycle of debt, large payments, high interest and the banks were able to control a customer’s account. There may have been fewer fees since loan extension was not an option, but they collected more on repeat loans. Banks takes payment directly out of the accounts and the customer is left in a hole. They take out a new loan to survive the next pay period and then hit the same wall a few short weeks later. Regulatory committees investigate when customers cry foul. It doesn’t change the fact that some sort of paycheck advance is in demand. People need more money management education. These loans work for those who make the payment a priority. It also helps to use a safe payday loan company that offers payment options. Borrowers may not be able to afford the full payoff, but at least they can pay it down and lower fees. Obtaining a new loan creates large fees all over again.
People need time to work money problems out. Time is money and when it comes to the lending industry, time is translated into finance charges. The option to apply is there, it is not a mandatory service.
Now the postal service is working on getting into the industry. Not only will their service provide their version of a payday loan, ‘postal loan’, but it will help those people without bank accounts limit paycheck cashing fees. Check cashing is a service that comes with a fee. People spend money to get access to their own money. The USPS will place your direct deposited paycheck onto a card for customers to use. If they need a loan, the postal service will offer up to 50% of the deposited amount. The fees are much smaller, but half your paycheck is a big chunk to pay back. Safe paycheck advance lenders would never loan that much of a person’s take home pay. The USPS will have access to your paycheck to collect full payment if the customer falls behind. What position will this put the customer back in? It seems like the post office will experience similar results as the banks. Eventually, people will fall into a cycle of debt here too.
Research your options and make the best choices for your personal situation. Don’t assume that one offer is better than the other as each business is out to make money in addition to providing a service in demand. Look at prices and payment options and find something that will fit into your budget.