The payday loan industry might have found its foothold fast, but several regulatory bodies are mulling serious curbs on it in a bid to protect customers from getting entrapped in viscous debt cycles. Thanks to indiscriminate borrowing and the predatory practices of lenders, the situation is quite grim today with a number of borrowers finding it difficult to free themselves of the inevitable debt trap.
Factors behind Popularity of Payday Loans
In the wake of the recent economic downturn, many borrowers have found themselves struggling to keep up with their loans. Failure to repay loans on time, on the other hand, has resulted in plummeting credit scores as a result of which these borrowers find it difficult to qualify for traditional loans the next time they need money. The absence of credit checks in payday lending has contributed to their popularity in a major way. Borrowers in a bid to meet their urgent cash needs prefer to opt for short term financing as it is free of the lengthy documentation hassles otherwise associated with traditional lending. Individuals generally don’t have to fax their documents for securing approval. Once the loan is sanctioned, the creditor sends the money to your account within 24 hours. It is this easy accessibility that has acted both as an advantage and a disadvantage at the same time. Let’s find out how.