August 25, 2020
Payday loans are designed to be quick and easy. And they really are as quick and easy as any type of loan gets. But underneath the quick solution, there are complications. This doesn't necessarily make payday loans a bad thing, it just makes it something to approach with care and a clear head.
The Importance Of Responsible Borrowing
To get back to the point of how quick and easy it is to secure a payday loan, the overall design is aimed at speed. Why? Because people like getting money, and they like getting it now. In other words, a payday loan can hit two birds with one stone.
But if the process is really so straightforward, then why is the contract several pages in length? Of course, few people actually take the time to read the contract, because how complicated can a payday loan be? And besides, they get to take home the money within a few hours, so why bother with the fine print?
Because it speaks to a person's attitude in regards to responsible borrowing. Only someone who takes every loan very seriously will know exactly what the contract states, even when it's an emergency situation where money is urgently needed.
Everybody knows that a quick loan is specifically designed to prevent individuals from doubting their decision. Before they know it, the papers are signed and the money is being transferred.
If attention is not paid to the contract being signed, it empowers the lender to add more fees, which the borrower only realizes when it is too late. But responsible borrowing doesn't end with reading the contract.
Being able to assess whether a loan is actually going to help is a big part of responsible borrowing, and whether the commitment can be upheld is another. Because when a person doesn't live up to their loan commitments, it breaks down their credit score and ruins their chances of getting more significant and substantial financing down the line.
And what about the emotional distress that comes with running away from loan companies and avoiding all calls? Responsible borrowing means not having sleepless nights over debt that is falling behind.
The Restriction Of Cash Advance Loans In Certain States
The requirements to qualify for an advanced loan are minimal. All that is needed is an address, a phone number, and a permanent income, which should be enough to cover the repayment at the next pay date. No credit check is necessary, and the money is received almost instantly.
But thanks to this quick process, some states are more wary about payday loan companies, which is why they have certain restrictions in place to protect the consumer. For example:
- New York
- Arizona
- New Jersey
- Georgia
- Maryland
- Montana
- North Carolina
These are some of the states that either restrict or prohibit cash advance loans. And the restrictions are directly tied to the interest rate they are allowed to charge.
However, there are states that don't restrict high rates. These include:
- Utah
- Delaware
- Idaho
- Nevada
- North Dakota
These states let individuals look out for their own interests when borrowing money, and with the clever way lending companies operate, the importance of responsible borrowing comes to mind. It is with good reason that some states implemented restrictions, and it only ratifies why every loan (no matter how small or quick) should be approached with a balanced outlook.
