Payday Loans

Online loans. Payday loans. This is simply the process of lending money with a promise to payback the loan on payday. There are variations of the loan payback timing but the essence is the same. Now, these loans and lending companies annoy me. Why would people lending money to people in need annoy me?

When people are desperate and in need for quick cash, it can be important to have a source for that cash; a lender who is willing to loan the necessary money for a short time. A crisis loan, so to speak.

Families would be the obvious place to seek a crisis loan. But there are people who do not have family members who are willing or able to lend the money. This means the person in need of the loan must seek other sources.

Friends would be the next stop to seek a loan to cover immediate need. Again, many people do not have friends who are willing or able to loan money. Those who have the means and would be willing to loan money have often been taken advantage of and will no longer even consider loaning money to anybody.

Banks, credit unions, trust companies would be the next possible loan source. Many people have such a poor credit rating that these institutions of credit will not even entertain a loan application. These institutions will trust you only if they believe your credit is rock solid and you present no risk They do not care about your problems and have no empathy for your situation. Your family and friends might at least offer sympathy. The major lending institutions offer only indifference and arrogance if you do not meet all requirements of their loan application.

So this leave the payday lenders. Again, you must be able to demonstrate that you are working and have a paycheck coming. The loan application is similar to that of the major lending institutions. But there the similarity ends. Many of these private lenders are unscrupulous when it comes to interest rate setting. To the indifference and arrogance shown by the major lending institutions, they add outrageous interest rates. They may appear to be concerned about your situation but that appearance hides the real motive. Interest rates are as high as 299% per year – the maximum allowed by law in this province. That is the annualized interest rate on a $300 loan for 14 days at $23 interest per $100 borrowed. 299%! And with this interest rate, one online company boasts of saving Canadian millions of dollars. What a warped sense of saving.

These lending rates should be criminal but they are not. They are exactly the maximum interest rates allowed by law in this province. And these companies simply set the interest rates to be exactly what is allowed in each province so that they are never in contravention of the law. In allowing such high interest rates, the government is certainly not protecting the interests of its citizens.

The first thing that annoys me about payday loans, then, is obviously the excessive interest rate charged on these loans. Because nobody else will loan the money, these companies maximize their profits by taking every last cent in interest that the law allows them to charge. It annoys me when one person (company) preys on a weaker person for its own benefit.

The second thing that annoys me about payday loans is that it enables those with addictions to continue on their path. These payday loan companies enable the gamblers, drug addicts and alcoholics to feed their habit even when they are broke. Families suffer because of the ease of getting the loans to feed habits.