Do Payday Loans Hide A Deeper Problem?

Payday Loans like any other loans have their own disadvantages and advantages. People apply to them because of the numerous benefits they offer. Everyone likes an extra amount of money with hassle-free disbursal. However, these cash loans have such a nature that a majority of the borrowers end up falling into a vicious debt cycle, which eventually leads to them having a bad credit score or even bankruptcy in several cases. 

It is preposterous that it is so easy to get quick loans for unemployed. High-interest rates do not seem like a problem to those who take payday advance. You cannot underestimate how crucial these loans are for people with low income or for those who are unemployed. They can be tremendously helpful during an emergency, which is why people opt for the services despite exorbitant charges. Since the world of payday lending has increased significantly at a noteworthy rate, it is imperative to know whether payday loans are hiding a deeper problem. 

With these loans, it needs to be assured that the lender is responsible enough to offer loans at an affordable price so that potential borrowers can easily pay back the amount in due time. But clearly, there is a problem hiding in there. There are several people in the UK who are in dire need of cash, this is particularly because they are underpaid by their employers or face exploitation at their workplace. This showcases the way that several businesses and organizations operate needs to change.

The Reality of the Situation

It is evident that the majority of people are stuck in debt traps or insecure work. This means that they have less access to benefits. Organisations are structured in such a way so that they can increase their profits and decrease their costs. In turn, the employees are given low wages and low to zero family-friendly rights. As a result, underemployment has grown. It is estimated that over 4.5 million workers are working under zero hour contracts or gig economy. 

Hence, underpaid workers are the new targets of payday lending institutions, which are able to repay the due amount along with high-interest. These workers can afford to make repayments but due to a sudden financial crisis, such as a broken-down car or a door, which needs replacement, they often cannot pay back the amount and take another loan to repay the first one. As time passes by, they take another loan and then another, until they are in so much debt that it is impossible to repay the amount. 

Another reason for their dependency on payday loans is because of their accessibility. Payday lenders are everywhere, giving the borrowers no shortage when it comes to a choice. The reality of the entire situation is that people need safer short-term loans, more secure jobs and better wages. 

The main motive of payday lending institutions is to make a generous amount of profit. With a significant number of borrowers who are struggling to repay the sum, it is true that these institutions work for their own benefit rather than the borrowers. Furthermore, these lenders often use a number of platforms to bring borrowers that are more vulnerable and offer them hassle-free services.

Conclusion

It is true that the UK is going through one of the most massive economic recessions, as a result of which, a large number of cash-strapped employees are looking for an easy way out to their short-term cash problem. While loans might seem like a quick, no-nonsense and an effortless choice, it is imperative for borrowers to decide whether they would be able to repay the amount or not. Without having a concrete plan, nearly anyone can face a financial crisis. 

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