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Payday Loans Fees Debate: Are They Right?

There are now and in the past a great debate about payday loans, while some people consider this kind of loan almost illegal, other think that is a extremely useful resource when it is needed, this article is intended to critically analyses the different aspects of a payday loan transaction, hopefully you might make some conclusions:

For example Hank Klein co-founder of Arkansans Against Abusive Payday Lending, is against the use of the term “fee” to describe charges for short-term loans. He thinks that what cash advance lenders are charging is actually interest that when calculated as such grossly exceeded the legal 17 percent limit widely established in the United States.

People against those kind of loans have been successful, after years of legal battles, for example, the state Supreme Court and the attorney general made the same interpretation, and the industry is now being ushered out of the state of Arkansas (Arkansas News Bureau, 2008).

However, the debate is currently taking place nationally about the use of the word “fee” by financial institutions regarding charges they assess for paying a check that normally would bounce, commonly marketed as “bounce protection.”

Consumers typically pay a 15 percent fee on loans up to $500 and a 10 percent fee on anything over that amount. For a $500 loan, that translates to $75, or an annual interest rate of nearly 400 percent. Consumers believe these companies are here to help them out, never suspecting that they are being preyed upon with offers that sound too good to be true. and of course hidden cost that are marked as fees and not as interest.

On the other hand, people who are needing cash so bad because of an unexpected issue are not thinking in the legal implications of their decisions, they need cash as soon as possible, and if payday loans are the way to go, then they just go with it. Many people have a need from time to time for short-term financial assistance and payday loans provide a viable solution

For example, there is no bank that gives you a loan without any documentation, no fax, no credit check during the next 24 hours, people may get up to $1.500, deposited in their account almost the same day of their application.

What would happen if there were no option for quick cash? probably people will get it by any means. Consumers obviously have managed to deal with their debt for decades before anyone had heard of payday loans. Consumers may use payday loans to avoid late-payment penalties and negative marks on credit ratings. Analyze all possible reasons would be endless.

To sum up, there payday loan companies that are charging over the legal percentage and that is a fact. However, consumer advised to compare many different lenders in order to get the cheaper rate possible. Moreover, payday loans online are just for unexpected events and should not be used in an ongoing base.

Hector Milla is editor of, where you can see our recommendation about what is – according to certain criteria – one of the best / cheaper Direct Same Day Payday Loans Lender. Click here in order to get a Same Day Payday Loan Online.

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