The Problem With Default Payday Loans

Payday loans have become the easiest and most convenient way to get a cash loan these days. In fact they are becoming more and more popular as time goes by. Unfortunately there seems to be a growing problem with payday loans, and both the lender and the borrower are to blame for this.

Default payday loans have some good points, one of them being that they are a convenient short-term solution to a cash flow emergency. The only problem with that scenario is that borrowers take loans that they cannot afford to pay back. Here the lenders are to be blamed as well because they do not do credit checks to establish if a borrower can afford to make the repayments.

Repeat borrowing then leads to escalated costs which can then make the loan very difficult to repay. The lenders are getting away with these unreasonable costs in the states where there is no usury ceiling. An estimated 70% of loans are repeat loans because the borrower needs a new loan to repay the old one.

According to statistics a borrower will take out an average of 8 to 9 payday loans annually. Some of those would be to repay the old loan. This is something that borrowers need to avoid, because the costs can become higher than the original loan. This results in unavoidable hardship on the borrower mobile payday loans.

While these loans may be a convenient and fast way to get cash, statistics show that borrowers are taking loans that they cannot afford to repay. Almost half the borrowers default in their first year of taking out payday loans. This is a clear indication that borrowers need to be more careful when taking out these loans, and avoid them at all costs if they cannot afford to comfortably repay them within the agreed terms.www.phonepaydayloans.net