In many situations, online payday installment loans are a great help in times of financial distress. However, if you scratch a little bit under the surface, many people have found loopholes and have shared common problems with online payday installment loans. This article will be discussing a more generalized overview of how and what are the common problems encountered by consumers of online payday installment loans. In addition, making yourself aware of some of the common problems most consumers are facing with payday installment loans will be a great help in finding ways to use these loans properly and responsibly.
Here are the common problems cited with online payday installment loans:
Overuse of Payday Installment Loans
Most online payday installment loans are designed for consumers having an emergency financial situation. Emergency financial problems can be faced easily if you have access to instant cash, for example, an online payday installment loan. The problem, however, is that some consumers use these loans even when they really are not facing a true emergency situation. These people are those who fail to budget and manage their money wisely and end up turning to payday installment loans to bail them out.
In fact, many of these consumers use payday installment loans on a weekly basis. They use these loans before each and every payday and never get themselves financially in a sound position. For example, if the cost of payday installment loans ranges from $10 to $30 per $100 borrowed, the effective annual percent interest rate can quickly add up when annualized. This is an expensive way to borrow money week by week. But for those who want to circumvent bank charges, payday installment loans can be very helpful avoiding the cost and the credit damage form a single NSF check. Therefore, online payday installment loans are wonderful tools when it comes to emergency situations. However, they should not become a way of life.
Falling into the Trap of a Predatory and Abusive Payday Installment Loan Lender
Unfortunately there are disreputable and abusive lenders that have been actively pursuing consumers of payday installment loans. A lender can be predatory, especially with the cost and charges of a loan, and take advantage of the urgent need for cash of consumers. In fact, this is one of the more significant common problems associated with payday installment loans and the US government has been doing their best to put an end to it.
So, it is therefore essential that consumers check the reputation and the loan terms of a lender they are going to deal with. It is important for any payday installment loan consumer to understand that before engaging in any transaction, they have to check the reputation of the lender. By doing their homework (shopping around first), they can help reduce the chances of being trapped or becoming a victim of predatory lenders and avoid these common problems.
Unable to Utilize Reliable Government Resources
Many consumers fall in the trap of predatory lenders of payday installment loans because they fail to take advantage of the informational services that are offered by the government. In fact, the U.S. government has been diligently proactive when it comes to overseeing the activities of payday installment loan lenders and other related services. You can easily find more information about payday installment loans and rules and regulations regarding these loans through your state authorities and online.