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How do payday loans work?
Payday loans are loans that cost borrowers ten (10) times the average interest rates. These are offered by loan sharks or colloquially called as 5:6 lenders. On average, bank loan is offered at 12 – 15% per annum, whereas payday loans has interest as high as 30% per month or 1% per day.
They are most likely preferred by borrowers who do not have a stable source of income or cannot produce proof of income such as small business (e.g. sari-sari stores). These loan sharks do not care if they get paid on time since they add interest on top of interest.
Why people prefer payday loans?
Payday loans require little to no documentary requirements and are released as soon as you need it. These lenders will only ask you to sign a loan agreement, and that’s it. However, these are short term loans, often repayable within 1 – 3 months at 1% daily interest.
Payday loans are bad news
There are thousands of loan sharks offering payday loans and until now nothing is being done to eradicate this usurious and predatory lending practices. They are often the cause why most people drown in unending debt.
Loansolutions offer an alternative to quick and easy loan with a much lower and reasonable interest rates.
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