Alternatives to Payday Loans: Trouble or a Solution?
While the payday loan industry is currently on thin ice, borrowers and financial experts have begun to name several alternatives for the similar kind of lending options. Payday loans have always brought about polar reactions and incited a number of contrasting opinions, and now that they may either disappear forever or stay on the scene, more people have begun to voice their opinion. Some describe them as a debt trap while other calls them a savior. Some believe that the end of payday loans is a blessing, while others believe it would be a disaster. While this debate will keep going on and on, let’s throw some light on a topic that is emerging side by side with this debate: alternatives to payday loans.
So what are people saying about the substitutes? Could these alternatives really replace the long-reigning payday loans, or will they bring even more trouble into the lives of the American citizens? Good or bad, one thing is for sure, the market for short-term loans is big and it is not going anywhere. Many of these people have become quite comfortable with the idea of payday loans being out there in case they have a financial emergency. It has even become a part of every financial decision for various families and many use them every month to make their ends meet and make timely payments for necessities.
So when an emergency strikes, a stroll down the payday lender can offer a quick solution, but the question is, if these new regulations keep up and if the payday loans run dry, where will these people go, to the alternatives? But what if these alternatives are even worse?
Other short-term loans that people might consider as the replacement to payday loans are installment loans and flex loans. The problem with either of these loans is that their regulations and rules are ambiguous. Their procedures are complex and time taking and they also have a high-interest rate. Some of these loans are like a revolving line of credit. If you don’t have the money, just swap the card.
Now, is that really better than the payday loans, which at least caution the borrowers about taking more loans, or convince them that they should only take out a payday loan in time of emergencies. But when you have a revolving cash flow in your hand, you also end up paying the extra pair of shoes with them, or buy fancy furniture that you had no need of but bought it just because you had money in hand. Those who think the end of payday loans will save the people from falling into financial debt, they couldn’t be more wrong. One problem will replace the other. Believe us when we say that payday is actually the littlest of all the evils. Because with all the different features of the alternative loans, the poor will only get poorer, and worse, will not be able to acquire quick cash for all the rainy days that might come their way.