Online payday lending – is this safe?

How do I start this? It’s the elephant in the room and surely won’t budge with a lame introduction. And that last sentence rhymed, so it’s pretty lame. Talking about security is like diving in the open water where there are sharks and barracudas. That’s no exaggeration when it comes to the Internet, so be warned.

Does this mean payday lending is too risky to take advantage of?

Definitely not what I was trying to imply.

Payday loans are risky only to people who don’t know how to make things work. It’s the same if you dive into the open waters without even knowing how to swim. You would drown long before the sharks are on you.

The same implication is present in payday loan lending. If you are unprepared or unaware of the risks that exist in the lending industry, no matter which type, you are signing up your own death warrant. The advisable thing to do, to take advantage of any type of loan, is to be well aware of the security issues. And therein lay your protection.

What about payday loans?

There are risks, just like in any other types of loans. There’s no risk level whatsoever, and one can’t say that payday lending is riskier than another type of lending. It’s important to note that the major risk can be seen in lack of knowledge.

Payday loans are wrongly believed to have outrageous interest rates. Quite the contrary, the interest rates are decent compared to other types of loans that you will find in the lending industry. Everything in this is fair, and you will see the interest rates as a decent trade-off for the immediacy and convenience of it all.

The problem is that payday loans provide too much freedom to the borrower when it comes to repayment. At the first failure of repayment, the borrower can send a promissory note and opt to pay another tier of interest rate. That redoubles the interest rates. In the scheme of things, it’s not really the repayment that failed, but the decision in part of the borrower.

You have to take this into account if you are borrowing a payday loan. Never should you, under any optional circumstances, opt to roll over your payday loan in lieu to the extension in the repayment. It’s the same as paying back the loan and making another loan of the same amount. In doing so, you are buying the time with the added interest rate.