The following is a guest post.
Payday loan companies lend out short-term loans at extortionately high interest rates. Designed to aid people in desperate need for a quick financial fix, payday loans come without any rigorous financial checking. The high interest rates and lack of financial background checking have put the practice of payday loaning under some unjustified criticism. This article will argue why payday loaning is a needed practice.
Wonga Labelled Wrong
Anger against payday loaning was recently vented at showbiz presenters Ant and Dec, after their ITV Show ‘Red and Black’ struck a £1million deal with Wonga for the payday loan company to be advertised by the program. The Twitter backlash rose to the point where Labour MP Stella Creasy joined in on the criticism and called for the duo to publically criticise Wonga.
Wonga also faced a barrage of criticism from football fans across Britain after the payday loan company struck an advertisement deal with the English Football League. The aftermath of the protests against Wonga left with the English Football League blocking the advertisement of the payday loan company.
Is the Criticism Unjustified?
Such criticisms of payday loaning however are rather unjustified. It must be reminded that those taking out payday loans, do so knowing the risks the practice entail and the high interest rates that come with it. The reality of situation is one of desperation involving those who feel the need to take out a payday loan and the lack of a viable alternative for these people.
Many of those who resort to payday loans are in harsh financial difficulty and are thus so desperate for a quick financial fix that they’re more than willing to take on the high interest rates that come with it. Furthermore, the lack of a proper financial background checking is actually one of the reasons many opt to borrow off payday loan companies. While the loaning system of banks and regular loan companies may be preventative to those in real need of financial aid, payday loan companies offer a solution irrespective of one’s credit history – something that’s very valued by those in need of the money, but with an unfortunate financial past.
In essence, payday loaning may not be ideal, but it is a practice nonetheless needed by many. This is especially so, considering the country’s currently rigid and tough economic climate. The problem isn’t payday loaning; the problem’s the economy that led to people needing a payday loan in the first place.