If You’re In Need Of Fast Cash – This
Shouldn’t Be Your First Option
At one time or the other many of us will have moments of being desperate for cash. Maybe it was in our younger years prior to getting financially established. Or, possibly it was later in life when all of a sudden, out of the blue; we lost our job at the worst possible moment.
What we normally do in those situations is to look for the least line of resistance to get that much needed cash into our pocket. Nonetheless, your very last resort to resolve this type of plight should be applying for a fast cash or payday type loan.
Not that these loans can’t serve a purpose, however they can be extremely expensive for the unwary that get caught in their trap. For those consumers that find themselves in a desperate cash strapped position there could be other less expensive options open to them. Possibly more options than they may realise.
In recent times the Australian Government have been trying to find ways and means to curtail some of the more predatory lending practices of these short term loan lenders. At the moment all lenders have to be licensed. Previously the Government introduced a rule to make lenders closely analyse whether or not a borrower has the ability to repay the loan. This requires the lender to drill down further into an applicant’s financial background to find out what their spending habits are like.
The Government is now working on more legislation to prevent ongoing exploitative lending practices by fast cash lenders. What they want to do now is to cap any repayments on any such debts to not exceed 10% of the borrower’s income.
The types of loan products that would be covered by these rules would include high cost installment loans, auto title loans and more specifically short-term or payday loans. What a lot of uninitiated applicants to these loans don’t realise is, if they don’t pay the first loan back on time they can end up in a debt spiral trap. This means the initial money borrowed could end up costing them as much as 380%, or possibly even much more.
The Government is saying, that too many unwary borrowers who go looking for quick cash flow relief are getting caught up in these loans that they really can’t afford, because of the often indistinct terms and conditions attached to them. With many of these consumers becoming trapped and they end up sinking into a long term debt trap.
The new legislation is aimed at establishing fairer more common sense lending practices by providing mainstream policies preventing predatory lenders taking advantage of borrowers through setting them up to fail.
The new legislation would provide inbuilt protection for borrowers by requiring these lenders to execute an upfront analysis or Full Payment test to calculate if the applicant is able to repay the new loan without hindering their ability to service any of their existing obligations, without having to reborrow. This is the practice where consumers of fast cash loans get themselves into serious strife. Because, it becomes a never ending loop of fees and charges being added to the initial amount borrowed and it becomes harder and harder for the borrower to dig themselves out of the hole.
So, the idea of the new rules is to allow borrowers who don’t meet these criteria access to other options in the way of opting out to a far less risky long term loan or even a principal payout option on a reduced shorter term loan product.
Having said that, if a short term loan is really your only option, remember to do your home work first, in the way of calculating if the amount you borrow is something you can pay back on time. Seriously think about the amount of money you want to borrow and consider if you could get by on a lesser amount that would be that much easier to pay back.
Even though it might be embarrassing, you should start thinking about people you know that might be able to help you through a tight cash flow spot, such as friends and family. Would your employer give you a pay advance (just don’t make a habit of it).
The main tip here is to try and think of other alternatives before committing to these types of loans. Even though we are saying there is a time and place for these loans, they are not for the unwary. There are other options out there for cash strapped borrowers that won’t put them in the precarious position of being in danger of toppling over into a debt trap.
For more information about these alternative options Click Here and scroll towards the bottom of that page
About Chris Steadman
Chris is enthusiastic and fascinated by the digital and social media worlds. He is passionate and enjoys entrepreneurial pursuits, wealth creation financial strategies, health, fitness as well as cooking. Chris is the webmaster at fast-check-advance.com, which is an information website pertaining to cash loans. He has a deep commitment towards writing about and helping people understand the basics of how the financial world works.