PHOENIX, Sept. 3, 2013 /PRNewswire-iReach/ -- Many financial pundits question the usefulness of payday loans, but one financial advice website, credit.com, recognized by both Fast Company and CNNMoney.com as a top 10 and top 20 finance website, shows that emergency personal loans in the form of payday loans can actually be a better option than late, disconnections, bounced check, or overdraft protection fees.
Here's the the scenario presented in the case study by credit.com:
"Consider the situation of a man we'll call Joe. Joe had to repair his car this month and doesn't have enough money left in his bank account to pay his bills. His two credit cards, car loan, and a utility bill add up to $300. Here is a breakdown of what he owes:
- Credit Card: $35
- Credit Card: $35
- Auto Loan: $200
- Utility Bill: $30
Joe doesn't get paid for another six days and the bills are due now. He currently has only $20 in the bank and will be paid $800 after taxes next week. Joe usually pays his bills on time and has pretty good credit. What are his options?"
They examine six payment options in addition to a payday loan to obtain the $300.
- Pay the bills by check and hope the checks don't bounce
- Pay the bills by check and use overdraft protection
- Pay car loans and utility bill by credit card an don't pay credit card payment
- Wait to pay bills until after paycheck comes in
- Borrow money from friends or family member
- Try to work something out with creditors
Here are the costs for each option:
- Payday Loan costs $60 to $90 in fees
- Option 1: $250
- Option 2: $125
- Option 3: $75
- Option 4: $73
- Option 5: $0
- Option 6: $0 and Joe's time to work out the four payment arrangements that are not guaranteed.
What did credit.com conclude? "In Joe's situation, an emergency payday loan is actually one of the more affordable options. As long as Joe repays the loan as soon as he gets his next paycheck, this may be his best choice."
Here's what a Payday-Loans.org CEO, Mr. Johnny Gordon had to say about the case study. "We've known this and have been trying to communicate it to the so called financial pundits for years. Personal loans make sense as long as you use them responsibly."
"The emergency loans are another financial strategy that is beneficial when used properly. People with great credit may not get that since they have multiple credit cards to use if their emergency fund is tapped out. Those who don't have good credit or an emergency fund need a lifeline. If they don't pay bills they are looking at multiple late fees, disconnection fees, and bounced check fees." And studies show this can end up costing the payday borrowers a lot more than the payday loan fees.
What can a payday loan matching service like Payday-Loans.org do to make sure their borrowers get the best rates and terms? Here's how Mr. Gordon answered that question: "We create a competitive bidding environment among hundreds of payday lenders so our users are assured the best available deals on payday loans."
Media Contact: Johnny Gordon, Payday Loans Organization Ltd, (818) 533-1996, info@payday-loans.org
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