The Risks Brought About by Loans Fast

2007-05-02 10:04:19

( Financial )



There are many lenders and finance companies that offer loans fast but you could lose more than what you owed when what you suppose to be a small and short-term loan turns out to be a very high priced borrowing.

Indeed, many cash payday loans fast are not really unsecured because the borrower writes a personal check payable to the lender for the amount borrowed and the fees. The fees are generally in the percentage of the value of the borrowed amount or a fixed fee. Upon extension of the loan, fees are also paid each time.

Thus, what is purported to be a loans fast is actually an expensive cash advance secured by a personal check considering the finance charge, interest and the annual percentage rate in addition to the fee charged, the broker’s commission and roll-over fee, if any extension is made.

Fast loan service can put you in a worse situation in the long run because quick credit is very expensive. You may even have to face bouncing checks charges if you forget to keep the necessary amount in your checking account. Payday loan is premised on the promise of repayment on the next paycheck which is why it has a very short term compared to other loans.

Considering that fast cash payday has a short term to mature, there is the corresponding very high annual percentage rate. There is no escaping collection because aside from the post dated check, there could also be debit authorization given to the lender. The borrower is expected to collect the loan without fail when due or to roll the loan over for a fee.

Because the borrowers have cash flow difficulties and considering there are few alternatives, problems can be expected to arise. The lack of extensive credit investigation can only lead to a rising level of indebtedness, which in conjunction with the borrower’s negative financial capacity, also pose greater risk to the stability of depository institutions as a whole.


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