Desperate Times: Why We Need Payday Loans

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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.

Comments (11)

  • I think the idea that people need payday loans so they should be available is a bit overused. It would be acceptable if this was really the only solution available to people who need cash fast. However, most people choose payday loans simply because it’s a fast and easy way to get money. With a little bit of effort it’s possible to come up with alternatives that work just as well and are much more safer for your wallet. Do you think people should look for other solution first, before they decide to take a payday loan?

  • Totally agree that there are lots of companies always looking for their benefit and charging very high rates. Hence lots of people fear to choose payday loans. One should understand this fact that the payday loans are not harmful unless you take it the most reasonable amount and repay it on time. Not only Wonga but many other companies are also facing criticism from people. Recently the Payday Loans Legislations are also modifying after such incidents. Lenders don’t check borrower’s credit history and it makes the whole approval process fast but also opens the door for those who are not needed such loans but still applying and getting. It should be modified in something better that would differentiate a really needy person and others before lending. Hope some new legislations make such move soon.

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  • Some would also advise to consider loans before things become so desperate on your end. It’s just important to get the scare out of loans that people usually have, and educate them more on how it works and how to take advantage of it in a way that works for you.


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