Nowadays society is driven by anything that’s fast and convenient. From the widespread of diverse hi-tech developments we’re currently enjoying, it’s incontestable that we now live in a culture where gaining of the things we want should come at an instant.
And this practice is observed even in the money lending industry, where quick and expedient loan processing must be promptly catered to the customers who are categorically growing in number. So before counting yourself on, it’s better that you should first understand how money lending eventually established its own trend in the financial market.
The way people think of it
Money lending is technically the act of providing temporarily amount of money bind by a condition that the borrowed amount will be returned on agreed time at a certain interest rate. In short, money lending is no different than putting your money at risk. It defined the business of cycling money over a financial community that in due course molded the shift of money lender into a bolder financial landscape. Since people have always the affinity to borrow money whenever they’re caught in financial trouble, money lending has been in the frontier of their preference. Why? Perhaps, money lenders had something they offer that defied the common practices served by the mainstream banking institutions.
The shares of advantage and disadvantages
Money lending is considered by others as an immediate answer to their urgent financial distress. It means that whenever unexpected expenses or other expenses that need not to be postponed arise, you can immediately ask the help of licensed money lender and get a loan that suits your financial needs. Often, majority of the costumers that refer to money lenders for financial assistance take a personal loan of their preference.
Payday loan is one concrete example of a personal loan mostly offered by the money lending companies. At one point, payday loan is beneficial since it provides the safest way to get a loan approval. Why? No credit check. No paperworks. No strict requirements. Payment is done electronically and loan processing is simple, fast and convenient. But the sad part comes when others indulge deeply into getting multiple short-term loans all at the same time. It’s where revolving credit comes in and the tendency is to keep the loans extending to the extent that may set off the borrower to default due to his numerous unsettled debts.
Its impact to the society
A study of Elliehausen, entitled “An Analysis of consumers use of Payday Loans”, revealed that most costumers used payday loan as a temporary source of financing, however, it didn’t directly claimed that frequent access to such caused the borrowers’ extending indebtedness and eventual default. But taking the positive effect of it, the study divulged that access to money lending, particularly the payday loan, may increase the communities’ resiliency towards their financial struggles, relax their credit constrictions without compromising delinquency and eventually reduce the incidence of financial problems.
Matthew Lawrence, a research fellow said: “The fact that people are using payday loans to cover predictable expenses shows that it is not a financial planning problem they face but problems of making ends meet. In a worrying new trend, young people are using payday loans to cover everyday expenses like their phone bills and rent, as well as their groceries and utility bills.”
The setback in handling payday loans from these money lenders may vary from one situation to another. Many factors must be considered to assess whether or not the access to such loans is reasonable. Some may use the money for profitable causes, while others may do otherwise. But whatever it is, we should bear in mind to borrow conservatively and be a responsible individual to manage well all our financial responsibilities.