During the last year, respondents most often took out payday loans in 69%. The reason why you are going to issue small loans doesn’t matter. Small loans for business development were also popular – 22%. The majority of borrowers – 62% – borrowed up to $1,000 at a time, the authors of the study found out.
Basically, borrowers were forced to borrow short-term loans for unforeseen expenses (38%) and everyday expenses (32%), and a quarter of respondents – for both of these items at the same time (25%).
Payday loans were used, among other things, for daily expenses (54%), repayment of other loans and credits (21%), real estate repairs, festive events and payment of interest on another loan (17% each).
Loan purpose best answer is daily expenses such as utility bills’ payment, medical services, car repair, etc.
Activities of payday lending services
Payday lending services carry out activities in the field of lending legally. The issuance of short–term loans is the main specialization of such companies. At the same time, the services offered are provided to all categories of citizens of the country on the basis of an ID. The term of the order and the interest for the use of borrowed funds is strictly regulated, which is prescribed in the contract at the time of its conclusion.
Applying only to officially operating MFIs listed in the state register of microfinance organizations will allow you to secure yourself as much as possible, if necessary, to issue a payday loan, as well as guarantee compliance with the rights and obligations of the parties to the microcredit process. The activities of such companies comply with the current norms and rules of the current legislation.
When not to take out payday loans?
There are situations in which the decision to issue short-term loans can have a lot of negative consequences for the borrower.
The main reasons why it is not recommended to take out a loan from an online lending services are:
- the activity of the organization is questionable – the absence of microfinance organizations in the state register, refusal to provide documents, unclear explanation of the rules for using borrowed funds;
- the idea of taking out a quick loan for entertainment – using a small amount for entertainment purposes in most cases is the cause of the borrower’s debts;
- the purchase of things that do not belong to the category of basic necessities – the desire to make such a purchase is unreasonable. The use of any borrowed funds implies the satisfaction of urgent needs;
- lack of stable income – in the absence of confidence in the fulfillment of financial obligations to any lender within the time period specified in the agreement, it is recommended to abandon the idea of issuing a small loan, which will avoid undesirable consequences for both the borrower and the company itself, which will be forced to go to court.
It is important to understand that a quick loan is an opportunity to receive urgent money to repay priority needs, and not to satisfy short-term entertainment.
Debt repayment is an indisputable obligation of the borrower. That is why it is necessary to properly assess your capabilities. Only a firm confidence in the imminent receipt of your own funds can become a reason for issuing cash advance.
Features of short-term loans
Practice shows that the service of providing small amounts up to salary by microfinance organizations is very popular among citizens and allows solving urgent financial issues.
A number of advantages over standard bank loans, expressed in accessibility and simplified requirements for the borrower, makes a payday loan in the eyes of a separate category of unscrupulous borrowers an opportunity to get easy money.
It is important to understand that the benefit from a payday loan is quite ambiguous, because it does not imply additional income for the borrower. In addition, it is necessary to treat the return of even the smallest borrowed amount with full responsibility and not to allow the idea that a microcredit organization will not apply to the courts for the sake of a minor debt.
When deciding to issue a payday loan, it is necessary to weigh all the pros and cons, study the information about the company, compare the terms with the offers of other companies and choose the most favorable for yourself.