(Newswire.net — July 7, 2013) Sydney, NSW, Australia — Unexpected costs are a part of life and may arise any minute. Pay day loans have emerged as a popular recourse in such times of need; however the loans have also come under the scanner of government and financial agencies because of the various risks these are accompanied by.
During an emergency need, a pay day loan can come handy – a quick loan scheme for short-term periods, these are offered by specialized pay day lenders who will lend small amounts, usually between $100 and $1000, based on specific loan regulations. Income and employment history are the major factors that determine the amount one can borrow.
In sudden moments of need when there isn’t sufficient cash at hand, a pay day loan can prove to be of immense help. A case in point is Jason, who required cash in order to pay off an automobile repair bill. His choice of using a pay day loan was based on its prompt availability. “I just answered a few question, showed proof of income and that was it,” he says.
Pay day loans have gained attention for the advantages they offer customers. For one, they are usually approved of swiftly, without any elaborate need for documentation and procedural formalities. The loans are doled out as soon as an agreement is signed and there are no restrictions on borrowers regarding the purpose for which they want to utilize the cash. Even individuals with a bad credit history are not barred for receiving a pay day loan.
However, even as positive feedback has poured in for such loans, skepticism has also emerged. The easy availability of pay day loans can lure customers into an unending cycle of debts The APR charged on many of these loans can be astronomical, as much as 650% of the principal amount. In an effort to regulate the industry, the government is also introducing a number of restrictions, which has led to great unrest among lenders.
Before availing of a pay day loan, some precautions are recommended for all customers. It is vital to compare interest rates offered by various lenders and decide on its suitability. Pay day loans are easy to get, but it’s crucial to first determine whether one can afford to return them in time.
If sought keeping its drawbacks and precautions in consideration, pay day loans may be helpful during a financial crisis.
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