Why Payday Lenders are Beneficial

Current Payday Lenders Don’t Deserve the Bad Reputation

3 Reasons Behind the Reputation

1. Banks

They do not provide access to loans for lower credit individuals. They determined that those borrowers were unprofitable and decided not to help them gain access to financing. Therefore, they concluded that payday lenders are evidently loan sharks. The interesting thing about banks is they drive more people into bankruptcy with revolving credit than any other product.

2. Media

Media organizations and consumer advocacy groups look at the APR and determine that all lenders are bad. They believe that an APR that can reach 400% is the only way to look at the service provided by these lenders. They revel in using the term “predatory” to describe the service even though they don’t know how it actually works. A $15 fee to borrow $100 on the day you apply is a fair agreement.

3. Government

Governmental agencies singled out the entire industry for the offenses of a few bad actors. Twenty years ago, there were a few nefarious groups within the short-term lending industry. Those groups are no longer in business and are replaced by legal, licensed and ethical small businesses.

8 Reasons Why Payday Lenders are Beneficial

1. First and foremost, service ratings from short-term lenders are at an all-time high. Many lenders are racking up 5-star reviews faster than any other service-oriented business. It turns out that providing first-class service and immediate response times is desired by borrowers.
2. Licensed payday lenders are the small businesses willing to put their own money on the table when the big banks won’t. Committing to pay for licensing fees and endure yearly audits to provide their services.
3. No security required. Payday lenders provide loans without receiving any security for repayment. An unsecured loan is considered preposterous to all lenders outside of the short-term lending industry. Everyone has an opinion regarding the cost of short-term loans, but no one seems to mention the higher default rates that also accompany the product.
4. A state licensed lender follows and adheres to strict lending laws for the state in which they do business. Many states’ enacted rules that cap rollovers and how many loans that can be given, usually that being one at a time.
5. Speed separates payday loans from many traditional lending products which require much more time and effort. Accordingly, an online application can be submitted in about 10 minutes, and the funds can be dispersed to the borrowers account the same day.
6. Multiple lending products are available with a storefront lender. Many lenders who operate a storefront, also provide other lending options like pawn and title loans. Some even provide a means of cashing checks for customers without banking accounts.
7. Another beneficial factor is the extended payment plan which has been put into place by many states and lenders to allow strapped borrowers more time to repay. This type of plan is also done with very little to no additional fees.
8. Above all, current borrowers are smart and don’t need consumer groups or the media telling them that a payday loan is bad. What they desire is equal access to credit and that is exactly what short-term lenders provide.

Don’t Believe the Misconceptions

It’s been very easy for most people to believe the misinformation spread by media and consumer groups about the short-term lending space. Many of the misconceptions are rooted in information from 20 years ago. Consequently, current lenders who are licensed by state laws are a very different business than the ones from years ago. They operate technically savvy legal businesses which offer a highly needed service. Comparing these lenders to a loan sharks is about as relevant as saying everyone still sends a check in the mail to pay their bills.

At LendingBear, we’ve taken the guesswork out of where to go for fast financing. Whether you’d like to shop at one of our pawn stores or simply fill out an online application, the process is convenient and reliable. There is a big reason we’ve been in business for over 30 years, we think of our customers first. With now over 8,000 5-star reviews, our customers’ have given us the real reason why payday lenders are beneficial.