Some Common Risks That are Associated with the Quick Payday Loans
As the name of this loan indicates, these quick payday loans are the loans that are provided by a lender to a borrower in a short time. The time that is taken by the lender can be as short as a few hours and the loan distribution can take as long as 2 days. There is never a time when the lender delays the payment of the money more than 2 days. The main reason for the delay of more than 2 days, if ever there is, will be because of the wrong information provided by the borrower to the lender on the application form.
As the name of this loan indicates, these quick payday loans are the loans that are provided by a lender to a borrower in a short time. The time that is taken by the lender can be as short as a few hours and the loan distribution can take as long as 2 days. There is never a time when the lender delays the payment of the money more than 2 days. The main reason for the delay of more than 2 days, if ever there is, will be because of the wrong information provided by the borrower to the lender on the application form.
As the loans are distributed very quickly, there are some risks that are associated with these loans. Let us have a look at the common risks that are associated with these loans.
Risks for the Lender:
Risks for the Borrower:
These are the various risks that are present for the lender as well as the borrower, as far as the quick payday loans are concerned.
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Risks for the Lender:
- Defaulting on the loans: This is one of the main risks that the lender will have. The main reason for this problem is that the person who is applying for the loan may have no intention of repaying the money. Once the loan has been given to the person, he may get the money and then disappear. Though the application details are provided by the borrower, the details provided may be wrong and the lender may not be able to track the borrower. This makes the quick payday loans one of the most risky ones for the lender.
- False information provided by the borrower: the borrower may also provide false information to the lender in the application form. There could be some genuine mistakes that are made by the person borrowing the money. On the other hand, there could also be other mistakes that are done to cheat the lender. If the lender identifies this false information, then he will reject the loan application, but if the scrutiny is not good enough and the lender does not identify the false information, then he may lose the money that is taken by the borrower through the quick payday loans.
- Delay in repayments: The lender will also have trouble when there is a delay in the repayment of the loan by the borrower. There are many borrowers who repay the loan amount on time, but there could be some people who do not repay on time. The problem with this is that the delay could cause the lender to have problems in recouping the money to lend again to another borrower. This is one of the main reasons for the lender to hike the rates on the loans which are repaid after a delay.
Risks for the Borrower:
- High interest rates are charged: The interest rates that are charged by the lender may be very high. The quick payday loans are provided very quickly and so many people do not mind giving these high interest rates. Even the higher rates should be reasonable and there are some lenders who may charge unreasonably high interest rates. This is a risk that the borrower has to take. The risk can be minimized if the person borrowing the money makes a genuine effort to try and find the best lender who is very reasonable in the rates charged.
- Additional hidden charges are labeled: The lender may also charge additional hidden charges that may be much more than what is expected for this kind of a loan. The loan amount that is provided by the lender is small. If the charges like the interest charges and other charges are very high, then it will amount to half the quantum of the loan. So, the repayment may become difficult for the person borrowing the quick payday loans. Even this risk can be reduced when you try and check the quality of the lender. If there are good reviews about the lender and if you know that the lender does not charge unnecessarily, then you will be able to understand that the lender is a good one.
- Lender may not be genuine: All the quick payday loans are applied and processed through the internet only. There are several people who make fake websites just like the ones that are available from the lenders. These websites can be misleading and the people who borrow money may get cheated by fake websites that collect personal information of the borrowers. Some websites may also cheat by collecting money from the lenders.
These are the various risks that are present for the lender as well as the borrower, as far as the quick payday loans are concerned.
Logon to http://www.loansbucket.com/payday-loans/quick-payday-loans/ for better knowledge regarding the payday loan.