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Are Payday Loans a Good Thing?

There are times in most of our lives when there simply is not enough money in the bank to cover an emergency situation such as a medical bill or a power bill that has to be paid. For some the easy answer is to use a credit card or go to the bank and apply for a short term loan. The question is what do you do when you do not have these options? Many have begun to look at payday loans as an option, but the big question is whether or not payday loans are a good idea.


Intended to be used as extremely short term loans that can be used for just this type of situation, these loans have their place in the lending world. As to whether payday loans from, for example, My Payday Lender, are a good idea or not, this has to be based more on the individual borrower more than it does the type of loans that are being considered or the lender themselves. When you first look at this type of loan, your first impression is that the interest rates are extremely high and that cost of the loan is unreasonable.

If you look at how the press has reacted to the entire payday loan industry, it has not been painted in a very favorable light. They talk of interest rates hovering in the hundreds of percent per anum and unscrupulous collection services. What the press and now many state governments fail to realize is that many of these lenders are providing a very valuable and vital service to those who borrow from them.

Being a discerning borrower?

Does this mean that all payday loan companies are safe to deal with? The answer to that is no they are not. As with any type of loan, a person needs to pay very, very close attention to the company they are planning to use and the terms of the loan itself. As with any other type of loan you can take out, even from a reputable bank, if you do not read and understand the terms, you can easily end up in trouble. The idea behind a payday loan is that you are only supposed to be borrowing the money for a very short period of time, usually 30 days.

As long as you stick to the original terms of the loan and repay it within the specified terms along with the interest (often referred to as fees), you are not likely to end up in trouble. For the most part the only time a borrower gets in trouble is when they fail to pay off the loan as this is when the interest and penalties start to rack up.

A complicated issue

Payday loans can be a good thing as long as the person who is borrowing the money is borrowing the money for a good reason and knows that they can pay it back on time. However, the onus does fall on the borrower to read and understand all of the terms of the loan. Keep in mind that under most state laws, the lender must disclose the actual interest rates, any and all fees and penalties that are being charged on their loans.

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