Why Are Payday Loans So Expensive?

When we have to borrow money quickly, the best solution for us seems to be a loan company that offers payday loans via the Internet. Thanks to it, we can borrow money even within several minutes and what is important, without leaving home. One may wonder why not everyone uses such payday loans, since we get money fast, without security and often without checking BIK registers. You can enter two answers here. First of all, we have to give back money quickly, because usually we have only 30 days to do it . Only some companies pay 45 or 60 days to repay. However, there is one more reason that makes many people think long before applying for a break. The reason is, of course, the high costs that accompany these types of loans.

We may wonder why companies offering payday loans on the Internet pay them “high” in terms of costs. There may be several reasons. First of all, these are loans for companies that give them immensely risky. For they are not fully able to check which client is the person who makes the request. There is no income control here, often there is no control of registers in the Credit Information Bureau. So it very often happens that people who borrow money do not pay them back on time. As you can guess, it is not easy for the lender to recover the borrowed money and generates a lot of additional costs. And often money can not be recovered. Therefore, in order for the company not to bring losses, it must raise the price of the product and somehow “make” its profit thanks to those who pay their debts on time.

Certainly one of the reasons why the payday loans are so expensive is the fact that the convenience “we have to pay”. If we can apply without leaving home, at any time of the day or night, it must cost us a bit more.

Loan companies themselves say that their offer is often used by people who are under the proverbial “wall” and simply have no choice but to use their offer. Therefore, they do not look at the costs that need to be borne in relation to the loan, they only ask for it. So companies know that even if they raise the cost of their loans, people who have no other option will submit an application to them and borrow money.

We are not surprised that despite the great competition in this market, loan companies do not reduce the costs of payday loans. The exception here are only loans for free, which are on the offer of many companies. If someone lends money to a given company that has such a promotion for the first time and gives it back in time, he does not have to pay anything more than he borrowed. But this is just a marketing gimmick. First of all, it is difficult to pay back all debt within 30 days, so borrowers usually extend the debt repayment date. And you have to pay for it. And secondly, if a person who has used a loan for free will again need money, it will most likely submit an application to the same company from which the offer has already been used. And for those loans you have to pay the costs, so this “special offer” very quickly returns to the loan companies.

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