Urgent Payday Loans - A Saviour for Unexpected Bills

Many customers know urgent payday loans are a saviour for unexpected bills. When calamity or emergency strikes, most people don't have time to head to a bank to ask for a loan; even asking friends and family members for a short-term loan can take some time. While urgent payday loans aren't the ideal resource to finance a long-term asset purchase, like a car, a payday loan can help families deal with sudden, unexpected bills like those needed for illness or transport costs. That's the value of urgent payday loans!

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Urgent payday loans

According to author Zac Gillam of the Consumer Action Law Centre, ("Payday Loans," 2010) financial planning by the consumer is needed to properly use short-term lenders such as payday loans. The individual or family must have a clear understanding of the costs associated with making the loan, and have the means (and financial discipline) to repay it as agreed. Current financial regulation restricts the upfront facility and ongoing monthly interest rates charged to consumers, but it's up to the borrower to make payments. For example, if the lender charges up to 20 per cent to make the loan and the debtor borrows $1,000, the net loan repayment is $1,200, in addition to any monthly account fees; If the borrower charges four per cent per month on the outstanding loan, borrowers must be prepared to pay the monthly costs as they come due.

Of course, repayment of a short-term payday loan is the best way to use this form of helping hand finance. Repaying the lender's principal, according to terms and conditions of the loan, is the best way to manage affairs. Arguments that the lender wants to encourage a strapped borrower to take out a loan he can't repay are completely false. The lender wants the borrower to take on only as much debt as he can afford. Return of capital, then repayment of interest as agreed on the urgent payday loans, makes the use of short-term loan funds a mutually beneficial financial resource.

Repaying the urgent payday loan: assessment

Adult borrowers should assess their ability to repay any loan, including a payday loan. Default, or failure to pay the loan, restricts the lender from advancing future monies to the borrower. Before asking a lender for a short-term loan, take the time to discuss the lender's terms and conditions. For example, if repaying the loan over a month’s time requires $100 per week, the borrower must budget this repayment accordingly. Current government regulations take into account that many borrowers need more time to repay an urgent payday loan in full without overburdening a monthly budget. The best way to assess one's ability to repay the urgent payday loan requires self-assessment. If a current budget doesn't include enough money to repay the lender, the borrower could request a smaller loan or decline the payday loan arrangement.

In an urgent situation, in which the borrower has a true financial emergency, payday loans can act as a saviour for unexpected bills.

Maintaining access to urgent payday loans

Payday loans are offered at a higher cost than other loans, such as those one might take out from a traditional lender. The benefits of urgent payday loans shouldn't be confused with the benefits of traditional long-term loans, such as secured car loans. The borrower and lender must mutually profit from the arrangement. The borrower assumes higher risk to arranging the loan. In most instances, the borrower and lender do what's required of them. Urgent, unexpected bills aren't those one budgets for and pays every month. The borrower should not use payday loans as a means to finance the monthly budget.

According to "Understanding Australian Consumer Credit Law," (Pearson and Batten 2011) free market conditions rely upon the borrower's ability to "know thyself." Over-regulation of consumer lending practices, such as those involving payday loans, would restrict borrowers' ability to access urgently needed funds. The authors estimate that about 14 per cent of Australia's annual consumer finance transactions could benefit from change. The authors conclude that much of the necessary change in consumer finance must remain with the borrower's ability to self-assess before taking out any consumer loan.

Most consumers agree that having more financial choices, such as those provided by payday loans, is preferred. Successful borrowers believe that urgent payday loans - a saviour for unexpected bills - rely upon the mutually beneficial borrower-lender arrangement.

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