Payday Loans have been around for thousands of years. It may seem like a somewhat odd statement to make, but it’s true. While they may not have gone by the name “Payday Loans”, short-term loans have been available as a line of credit since biblical times. In modern times, however, the big rise in popularity of these loans came about, in the United States at least, in the 1990’s. Back then they were known simply as cheque cashing loans. The main appeal then was as it is now – you could walk into a store with nothing and walk out of the store with credit.
The Internet revolutionised the Payday Loans industry. Prior to the Internet the only way to secure a Payday Loan was by going to a store, or posting documents through the mail. Throughout these times people still had to rely on faxing documents as a form of identification to allow the Payday Loan Company the opportunity to analyse their eligibility for Payday Advance Loan. With the advent of the Internet, however, these days are long gone. Applicants can apply online and receive a decision almost instantly, thus increasing the popularity of these types of loans massively.
Owing to the great rise in popularity of these loans, more and more consumer groups have risen up in defiance against this type of loan being offered to supposedly desperate consumers with little to no alternative. The main argument against Payday Advance Loans has been the extortionately high-interest rates charged by some lenders. Some lenders quote rates in excess of 1000%.
These rates however need to be looked at in relative terms. The true cost of a Payday Loan amounts to little more than £25 for every £100 borrowed. That means that were you to borrow £200, you would be due to repay £250. Compare this to a personal loan over the course of three years, and it is clear to see that APR is an inaccurate measure on the true cost of a Payday Advance Loan.
About the Author:
Mark Jang is a renowned author on Payday Lending.