Texas is a state known for the luxurious lifestyle of its people. And this lifestyle is often associated with a short term cash crunch or a long term bankruptcy. Though bankruptcy is a tougher problem on hand, short term cash crunch can be taken care of easily nowadays because of the easy availability of online payday loans Texas, view it. Let us begin by understanding what exactly a Payday loan is.
What is a Payday loan?
Payday loans are short term loans that are given for meeting a short term financial crunch or for a cash emergency. These are usually availed by people with a poor credit history and who have a track record of defaulting on payments. Thus, the interest rate on these loans is very high (much higher than normal long term bank loans), and that covers up for the higher risk associated with them.
Payday loans can be given by small offices or companies as well as by banks. However, nowadays, the most popular form of lending is Online Payday loans Texas.
Why go for Online Payday Loans, Texas?
There are various pros of applying for a payday online in comparison to taking it from a bank or a payday loan office. In addition to the most obvious factor of convenience, online Payday loans Texas are also easier with respect to the documentation involved. Banks and other small financial companies have more guidelines to follow, and thus have more stringent policies when it comes to disbursing payday loans. Online companies, on the other hand, are not bound by any such guidelines, and thus are more flexible. Therefore, it becomes much easier, especially for people with a bad credit score, to avail payday loans online as compared to offline.
Regulations in Texas
Online Payday loans Texas have been gaining popularity because the rules for the payday loan industry are very hassle-free and relaxed. There is no cap on the maximum amount that can be disbursed to a borrower as a payday loan, and there is also no cap on the maximum fee that a company can charge the borrower. As a result, the annual interest rate on payday loans can sometimes be as high as 600 percent in Texas.
These regulations apply to both online and offline payday loan lenders. The only requirements are that the lenders should have a valid license and that they must clearly state all the information concerning the loan (like interest rate, the upfront fee charged, tenure, other terms, and conditions). This information needs to be given before the documentation for the loans is done, so that the borrower is well aware of the costs associated and the risk he runs by taking such an expensive loan.
Is it worth the headache?
As per online payday loans Texas regulations, no one can be sent to jail for defaulting on paying back a payday loan. Even though this may sound very positive to people who have a track record of defaulting on their payments, it should in no way be construed as an incentive to take a payday loan. Though payday loans can be of great help in situations such as a medical emergency, it is essential to understand that the costs associated with it are particularly high. People only end up increasing their expenses and do not avail of any real benefit in the long run.
Though the regulations in Texas do not allow the companies to rollover an existing loan for a longer period in case of a default in payment, it has been observed that many borrowers end up taking multiple payday loans from different companies to pay back an existing loan. This practice leads to poor financial health, and they are never able to come out of this vicious cycle.
As a practice, it is a wiser decision to try and manage your finances in a better way rather than relying on the existence of payday loans for any emergency. People should work towards building up an emergency cash fund, or they should consider taking up a part-time job to make some extra money. Healthy lifestyle and healthy financial planning always call for payday loans to be considered as a last resort.