Payday loan: a great help to the people.

Life is full of problems. If a day comes when some really urgent money is required then what will the people do? The answer to this is payday loan. These loans are meant for such urgent expenses. They are loans which have to be repaid within a short period of time. These loans, generally, have exorbitant rates of interest. It seems that they are advances made in cash. Generally poor people or the lower middle class people require payday loan in case any urgent payment is to be made by them. It has its own positive points and the negative points.

The good point is that it gives us immediate when it is required urgently. But also with that it has the negative point of very high rates of interest. Many people view it as exploitation of people. Many banking institutions also provide overdraft facilities. This proves to be an alternative to payday loan. If the people are not able to repay the loans then the lenders may indulge in some activities which are illegal to get back their money. This is also a negative side of these loans. Also in this modern world who will be able to bear these high rates of interest.

To obtain a payday loan, the people have to show their recent receipts and payments and also the statement from the bank. The rates of interest are regulated by the government of the country. The minimum and maximum rates of interest of interest are given by the government. Accordingly, the lenders charge a rate which is within the maximum and minimum limit. The lenders also fix the time of repayment. The borrower has to give a post dated check at the time when he is receiving the money from the lender. If the borrower is not able to repay the loan then the lender can deposit the check in his bank. If the borrower does not have enough balance in his bank account and the check is dishonored than the lender charges extra charges along with the rate of interest.

Many people point out that the payday loan is exploiting the people due to its high rates of interest. They point out that the along with high rates of interest of interest they also use unfair means to get back their money which is disastrous for the borrowers. However, if the borrowers are not able to pay back their loans, then, they can renew their loan after payment of the penalty.

Thus, this new system has relieved the borrowers a bit. Nowadays, we can see many unions and consumers credit societies who give short term loans at low rates of interest. Many cooperative societies have also been established for these purposes. It seems that the culture of payday loan is fading pretty quickly. There are many other means which are available in the market.