An increasing number of households all over the world are discovering it harder to keep pace with the ever growing inflation monster. This has meant people now have to shell out more for day to day expenses such as food, energy and gas and that in turn is leaving them with much lesser income in their pockets to last the month. The only alternative for them then to meet exigencies is to take payday loans.
The main reasons can be summarized as under:
a) It is indeed becoming very pricey to live anywhere in the US or Australia. The number of payday loan borrowers in Australia for example has been showing a consistent increase as people struggle to keep up with the inflation and their own rising aspirations.
b) Australians have become very dependent on these payday loans and that has reflected in a tenfold increase in growth of this industry over the past decade. The development as well as popularity of cash advances is following a similar trend in the United States of America where there are numerous payday lender outlets.
c)According to experts tracking this payday loan industry, in Australia itself, the number of providers have gone up ten times and the amount being transacted has crossed the $200million mark, clearly showing that payday loan borrowers are on the increase and there are also consumers who are regular borrowers.
d) The trend is a rather disturbing one as consumers often get trapped into paying high rates of interest to avail of such loans and end up getting involved in a vicious debt trap. To extricate themselves from this trap, they often have to pay even higher service charges leading to a further depletion of their expendable income.
e) Whilst individuals should know about the hungry lenders preying on them in this industry like in other industries, they also should recognize that these payday loans came into being and were created as a temporary arrangement to meet exigencies so that they could avail of them without undergoing any of the typical inconveniences associated with conventional bank loans.
f) Customers should likewise be cautioned to repay the loan when feasible; ideally when they get their following pay check as otherwise they would end up paying a very high rate of interest on the outstanding amount.
g) Payday borrowers though affected by the rate of interest still see payday loans as a true blessing and also a viable way to assist them in their monetary struggle to deal with the ever climbing inflation rate. As living costs continues to lag behind wage increases, even more customers are choosing to make use of these cash advances to compensate for their shortfall in income.
The spokesperson from the payday loan industry on the other hand states that due to stiff regulations in place, there is no exploitation of customers and that the lenders are following responsible lending practices. He says that the very fact that a large cross-section of consumers consisting of professionals like doctors, lawyers are availing of these payday loans means that the industry is following ethical norms and not putting anybody into strife.