We will firstly discuss the negatives of payday lending.The amount of interest that is charged by the payday lenders is dragonian.The finance charge for the payday loan looks reasonable until it is converted to annual terms.For example, if a lender charges $100 for a one-month payday loan of $1000 then interest is being charged at an astonishing 120% per annum.Also this simple interest, but when it is compounded payday lenders have been charging interest amounting to 3000% also.This is in stark contrast to what banks charge.

Payday lending is resorted to generally by low income communities and thus the interest charge really drains money from these people.Payday lending has a direct negative effect on savings and asset formation which is critical for the growth of any country.Lenders argue that the high interest is for the risk they bear for defaults which is also very high.There have been surveys conducted which have shown that the defaults by people availing micro finance is minimal.The recovery in case of default on repayment of payday loans is not much regulated and thus it gives rise to an awkward situation.That is why some borrowers fall into the debt trap.Critics have accused payday lenders of making the poor poorer and thus increasing the economic disparity between the people.This is due to the enormity if the finance and interest charge.

People who are for payday lending have argued that payday lending opens up a window for people requiring funds in case they have exhausted all other options.They have also argued that the high finance charge is in line with the costs particularly if you take into account the loan losses which are relatively very high.Payday lenders also argue that if they charge rates similar to banks then because of the small amount of loans they will not be able to recover the loan processing and verification and administration cost.When your urgent cash requirements would be satisfied each time then you would surely feel secure which is exactly what payday lending has done and thereby increased the household welfare.As monetary requirements are met there is a direct bearing on the crime rate which does come down.Also payday lending contributes to the social welfare by reducing the number of drug and alcohol addicts.

There are different varieties of loans offered by payday lenders.One of them is the military payday loans with no credit check.Military personnel are a special set of people who rightfully enjoy many privileges.Checking their credit would be an insult.Moreover there is a lot of transparency even otherwise about a military personnel’s background.Such lending helps these special group of esteemed people and also their families when they themselves are far away on duty.

Another type of payday loans is the direct deposit payday loans.Direct deposit of the loan is possible in case of online payday transactions.Instead of mailing a check to you the lender will directly deposit the loan in your account.Availing of funds does not get any faster than this.