The practice of payday loans is one that has come under much scrutiny over recent years. This is unsurprising given the extortionately high interest rates that come with them, in addition to the subsequent need for these loans to be paid back very shortly after the receiving the credit. However, in a society and global economy plagued with financial depression, payday loans are a lot more needed than people think. The cold reality is that payday loans are actually a necessity in the currently harsh economic climate.
Anti-Payday Loan Sentiment
It is clear that as a society, we have generally generated a hatred for payday loaning. Not only is this understandable, but it is commendable that our morals have pushed us to protest against practices which we deem harmful.
Our anger was recently demonstrated through the wave of criticism the ITV show Red and Black faced for being sponsored by payday loan firm Wonga. This disparagement rose to the point where the show’s presenters Ant and Dec found themselves under intense disapproval at being associated with Wonga.
Another example is in the fact that the same payday loan company Wonga, were banned from being advertised by the English Football League. The decision against Wonga was made after a protest campaign launched by football fans across the country.
With payday loan companies known to offer interest rates of up to 2000%, it is pretty clear why many people are against the practice. The fact that the payday loans are handed out relatively quickly after applying, also means that there is very little financial background checking done before loaning out, to ensure the recipients can pay back the money lent.
However, the resentment against payday loaning is ignorant of the actualities behind the situations those needing to loan money out have found themselves in.
The vast majority of those who take out payday loans suffer from hard economic difficulties. They thus resort to payday loaning with no other option but to. The fact that there is very little financial checking done is one of the reasons many people willingly resort to these loans. Those who take out payday loans are obviously unable to receive money from their banks and are clearly desperate for the financial aid.
The alternative to taking out payday loans for many Brits involves bailiffs, the loss of property, hunger and other extremely unfortunate circumstances. Payday loans are thus for these people, a welcome haven against financial dissolution.
Another alternative is of course borrowing off a loan shark, and we know the risks this entails. Faced with the options many payday loan recipients have to face, the practice must continue for the good of our society.
The problem isn’t in payday loaning. It is instead in the whole financial capitalist system, based on interest and usury, which has led to the current economic depression that has created a rising need for payday loaning. Fix that and payday loaning too will in turn disappear.
The author of this article is Tahar Rajab, a young British writer. He was educated at Queen Mary College, University of London where he obtained an Honours Bachelors Degree in History in 2011. He has since gone on to write for a variety of blogs.