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4 Top reasons why you should prefer 3 month loans over payday loans?
The concept of 3 month loans is slowly substituting payday loans. This article lists four prime reasons why one should prefer 3 month loans over payday loans for the knowledge of readers of this article.
Urgency of cash always drives people to the walls. In such times, normal tendency suggest that one should go for payday loans. However, opting for payday loans in such situations might not be the right decision in such situations. Hence, what to do then? In such cases, if better sense prevails, focus should be on finding a deal that gives ample chance to repay the loan but not without putting much stress on sources of income of the borrower. Obviously, finding a short-term alternative of this type isn’t that easy but then as the popular adage goes, ‘Where there is a Will there is a Way’.
3 months loans are known to be the best alternative to modern-day payday loans. Reason: There are plenty but few have been listed here.
Point No.1 – Longer Repayment Tenure
Yes! 3 month loans become an obvious choice for people who need an instant credit help but are not in shape to repay it back almost the same way. As the name suggests, the time-period offered is sufficient to repay any sort of short-term debt. Clearly, longer repayment tenure makes them the most sought-after loan product in the industry today.
Point No. 2 – Comparatively Low APR
Another place where 3 month loans earn brownie points is on APR front (also known as Annual Percentage Rate). Normally, as everyone knows, payday loans are secured against next month’s paycheck of the borrower. But even then the APR is on the higher side. However, in case of 3 month loans, APR is far more relaxed then its payday loan counterpart because of the time duration.
Point No. 3 – Larger amount can be quoted!
Under 3 month loans banner, one can quote a comparatively higher sum as loan amount than in case of payday loans.
Point No. 4 – Room for negotiation with lender!
In case if you have missed the deadline or you are set to miss the deadline of payment of instalment. 3 month loan give you an option to talk to your lender and explain things to him/her and ask for an extension. But remember, the decision to extend the deadlines or granting such favours rests with the lender only. Although the same chance is also available to lenders under payday loans but then you don’t have much time at your disposal to ask such things.
Meanwhile, the fourth point is applicable if the borrower wishes to seek waiver for certain fraction of interest or amount.
If one will gave a close look to these differences, he/she will surely be able to figure out why one should prefer 3 month loans over payday loans.
Predatory Payday Loans?
At one point it appeared that the entire payday loan business was made up of a small group of loan sharks out only to make a buck off the backs of anyone who would take out a loan. This perception has changed in recent years with new regulations. Payday loans are even able to help some people save money!
At first look the interest rate appears to be pretty high, but it is often much less expensive than some of the alternatives.
Now we will look at some common misconceptions about these loans. First, payday loans are overly expensive, well probably. Of course being expensive is only relative to what the alternatives are. Taking out a payday loan instead of bouncing a cheque in most cases is a cheaper alternative. Fees for bouncing a cheque are quite often much higher than the interest paid for these loans. This is not just marketing hype by the short term loan companies, it is a fact.
If you calculate the costs it is easy to see the benefits of the payday loan over the bounced cheque. Next it is claimed that payday loans prey on the poor and under employed. However, this is not the demographic that these loans are targeted to. Industry numbers prove that the loans are not targeted to people who cannot afford to repay the loan. It would be foolish to loan money to people who can’t repay. In fact, the people who use the payday loan services are generally lower to upper middle class and have incomes in a range of thirty six thousand dollars per year. If this is the case why do they turn to short term loans then? Because it is fast! Payday loans can be deposited into a person’s account in minutes or hours and not the potential several day a bank may take. A main point is credit rating. Most people the avail these loans have less than perfect credit for whatever reason.
When something happens unexpectedly these people have few alternatives to get the cash they need to make it through the situation. Now, it has been said that payday loans cause people to get into a cycle of debt that harms them further. Well, no one forced the person to take out a loan and if they did so knowing they couldn’t repay, it is not the responsibility of the loan provider. What it amounts to is the borrower not exercising good judgment and perhaps not being honest about his finances. When these people avail a loan knowing they money will not be available to repay it, it is the individuals fault, not the loan companies. The loan was not made without the borrower’s consent. The borrower had to apply and sign an agreement stating they have the ability to repay on time.
No one was forced into the contract. The perception of a loan shark is not deserved and is actually far from the truth. Most of the people whom are hurt by payday loans are the people who knowingly enter into an agreement they can’t honor. There are some exceptions though, and the loan companies gladly work with these people to get their money back. If the loans were predatory as has been claimed, fewer people would actually be able to repay the loans and the companies would go out of business quickly, but this is not the case.