Are payday loans fast becoming a loan of the past?
Payday loan lenders have received a lot of criticism for their lending procedures, including being careless with regard to their lending criteria and lending money to almost anyone that applies. This has meant that many of these payday loan lenders have had to change their policies and criteria fast in order to remain in business and to rebuild their falling reputation.
What does the future hold for these payday loan lenders?
Tightening up their lending criteria has meant that companies such as Wonga are now making losses and having to cut staff positions to lower their overheads – but does this mean that the payday loan is fast becoming a loan of the past?
This is debatable as 52% of payday loan borrowers state that being approved for a payday loan helped them through until payday, so there is obviously still a market for these types of loans, loans that can be beneficial if used correctly and the borrower can afford to pay them back. It is likely that the other 48% that were unable to repay their payday loans should never have been approved for a payday loan in the first instance. With tighter regulations and lending criteria it would seem that payday loans companies can still operate and make a profit, whilst lending in a fair and ethical way.
Can you afford a payday loan?
A likely scenario is that you have an emergency expense that you need to pay in between pay dates and you need a payday loan fast. The expense could be a car repair or boiler repair, something that is crucial to maintaining your living standards. If you do not have access to savings or the ability to borrow from friends and family, but you have enough disposable income on your next pay day after you have paid your essential living costs including your mortgage / rent, bills etc then a payday loan could be a good solution for you.
However if you are looking for a payday loan simply because you need extra money to cover your mortgage / rent, bills and living costs in between pay dates or to repay other debts owed it is a sign that you are in financial hardship and getting a loan could only worsen your financial situation, therefore you probably should look at alternative ways to increase your income and reduce your monthly spend.