Warning Issued By Debt Charities against Companies Offering 0% Interest Payday Loans by KaillyDesuza


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									Warning Issued By Debt Charities against Companies Offering 0%
Interest Payday Loans
Debt charities have warned borrowers to stay clear of companies that offer
the 0% introductory offer on short term payday loans as this could result in
debts spiralling out of control. While these offers are extremely attractive
and might appear to be extremely handy and useful, financial experts
                                         believe that these offers prove
                                         dangerous for people who are
                                         vulnerable and are struggling with
                                         their finances. Though payday loans
                                         come in handy to tide over tough
                                         financial periods, only professional
                                         and authentic companies should be
                                         consulted before borrowing money
                                         from them in the form of one of
                                         these loans.
Besides, payday loan companies tend to lose money if people avail the zero
percent introductory offers and make their scheduled repayments. But,
when borrowers are unable to meet their repayment deadlines and start
incurring astronomical interest charges in
spite of borrowing a small amount of
money, this is when these short term and
high interest loans help these companies
make their profits. Defaulters should not be
allowed to access more credit as they start
to roll-over the loans if they are not able to
meet initial repayments.
Statistics indicate that the number of debt clients have increased fourfold in
the past two years and a major segment of these clients with payday loan
debts who were already in financial difficulties were approved for these
payday loans. Only those lenders who conduct thorough checks are safe
because they do not approve loan requests from people who are either
unemployed or belong to the low income group. Currently, there are
discussions around creating a state database of borrowers who have high
interest payday loans to prevent them for taking out more than one payday
loan at a time, which might prevent them from spiralling into debt
                       potentially. According to the company that provides
                       these databases, the process is easy and quite
                       inexpensive and this might soon make way for a
                       payday loan bill that will be reinforced by the
                       government to reduce the number of money-losing
                       loans that the industry must write off. These
                       databases might prove to be a good middle ground
                       between the industry that wants no changes and
                       opponents who want to kill the payday loan industry.

The business model of any payday loan company is based on a fast
turnaround time and instant loan approval. They must always ensure that
their checks on a potential borrower are based on strict lending criteria
including their employment status and their total monthly income. Payday
loans are a better alternative when compared with other forms of lending
such as unauthorized overdrafts that cost quite a bit if encashed on a daily
basis. Not all companies in the market today that offer payday loans are in
the business only to make money and earn a quick buck. The usefulness of
these payday loans is highlighted when people need to pay unexpected bills
or encounter an unanticipated financial situation that requires a cash
payment immediately.
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