The advance of loans taken against paycheques is helping investors and families alike find necessary liquidity despite the fact they are unable to get secured loans. These online “payday loans” are also a good hedge against the borrowers’ inability to get credit due to a less-than-perfect credit history.
This has several implications for all types of potential borrowers:
- Investors can take positions quickly – When an opportunity in the market or elsewhere arises, the investor who is short on quid can still get in on it. The amount of a paycheque loan available depends on the borrower’s wage rate, but on second and subsequent loans the largest amount allowable is £1500.
- Credit history might be improved – Individuals can also borrow as little as £50, which might be all that is necessary to cover an important bill that might get very expensive if allowed to go delinquent.
- Covers emergency expenses – Unlike with some secured loans , the use of the money need not be collateral-linked. So if the expense was a non-tangible, it is still possible to get the paycheque loan or loans.
- Covers typical expenses – Simply paying any household bill is allowable with loans against one’s paycheque. This is very useful when one or several obligations need to be met and yet your pay date is not until a week or more later.
- Keeps people working – On a broader economic level, the paycheque loans available to and used by millions are effective at keep people and their homes intact. For example, if a person needs an emergency car repair in order to get to his or her job, that money can come from this type of loan – and the cash arrives within one hour. It’s a great way to keep yourself functioning.
A secured loan is great for car and home purchases. But some of life’s expenses do not neatly fit that model, which is why payday loans play an important role in the economy.