Think ‘payday loans’, and as an uninformed consumer, it is natural that you would conjure up images of spiked interest rates, information misuse, and loan fraud. Those who parrot apprehensions 2 & 3 as a reason to stay away from payday loans often fail to realize that it is an issue of subjectivity. It always goes without saying that once you drop your guard or if you run out of luck, there is always a possibility of being conned or victimized. Although there are instances to justify this sense of insecurity, one must understand that isolated cases don’t make for credible yardsticks. As for apprehension 1, which perhaps is the most widely quoted, a closer inspection reveals how unfounded the allegations are.

In the case of high-street lenders, their reputation precedes their practice. It is, therefore, not hard to see why people prefer conventional belief to proven facts. Banks are perhaps the biggest beneficiaries of this unswerving trust reposed by the consumer. So much so that veiled fees in the form of bounced cheque penalties, late bill payment charges, etc. escape the untrained eye. The lens, inexplicably, is trained on payday loans and short-term, justifiable interest rates suddenly seem like an eyesore. Sample this: renowned lenders/banks charge as high as £38 for bounced cheques or delayed bill payments. On the other hand, a payday loan, which can be utilized to meet emergency expenses, costs around £25-£27 for every £100 (for a month). Isn’t it, therefore, obvious that a bank is in fact less transparent about a customer’s actual liability during a financial hardship?

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Also read ‘Do You Need A Payday Loan Or A Bank Loan?’

Tags: bank vs payday lender, overdraft fees, payday loan benefits

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This entry was posted on Tuesday, August 11th, 2009 at 9:57 am and is filed under Credit, Lending stream, Payday Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.