If you’ve ever found yourself in a financial pinch, short of money until your next payday, you may have considered a payday loan.
Facing unexpected financial setbacks can be frustrating and leave you feeling like you're in a tight spot. It's worse when you have bills or expenses to pay before your next paycheck arrives.
In such situations, payday loans can seem like the solution. However, payday loans can be tricky to navigate. Some come with high-interest rates, making it difficult to pay back the loan.
Fortunately, there is a safe payday loan option. In this article, we’ll explain how payday loans work and what a safe payday loan is.
Not all ‘low-cost’ lenders are created equal
Many payday loan lenders charge high-interest rates, sometimes more than 50%, making it challenging for borrowers to pay back their loans.
Even those who claim to be low-cost lenders are still charging a lot. Technically, a loan company can call themselves ‘low-cost’ if they charge less than 50% a year. They get around this by charging 49.5%. That's not sweet. In fact, it's incredibly misleading.
What’s a Fair Interest Rate for a Payday Loan?
On the other hand, long-term lenders typically charge between 9.95% -35.5% per annum.
Naturally if they are lending out big amounts like $10,000, $20,000 or even $100,000 over a longer period of time, they can make a lot of money off those loans.
With small amounts like $500 loans, it's just not feasible. For example, 15% of $10,000 is $1,500 a year.
15% of $500 is just $75 a year. Over a pay period of two weeks (typical lending period) that's just $2.88. That's not a sustainable business model.
We charge 35% per annum, which is still really low and within the range of long-term low-cost lenders, but it allows us to cover our costs and remain profitable so we can keep offering this service.
New Zealand has implemented legislative changes to protect borrowers from falling prey to loan sharks that trap them in a cycle of debt.
The most any loan company can charge is 0.8% per day, which equates to 292% p/a. The maximum a lender can charge in fees once a loan falls into default is 100% of the original amount borrowed
Because of this, many short term loan providers have exited the market. Some of these companies were charging upwards of 300% previously!
But there is still a need for people to be able to access small amounts of money for a short period of time. That’s where safe payday loans come in.
What’s a Safe Payday Loan?
Avoiding a cycle of debt is an essential factor in financial security, and that's why Sweet As Money provides a safer borrowing option.
Our tagline, "fast cash when you need it, without all the money traps," reflects what we stand for.
Sweet As Money's services are user-friendly. Our online application process is simple and easy to understand.
You can fill out your online application within minutes and get a response sometimes on the same day.
You don't need a perfect credit score to qualify for our loans. We focus on your current financial situation and ability to repay the loan, rather than factors beyond your control, such as past credit history.
About Sweet As Money
In conclusion, Sweet As Money is a short-term loan option for people seeking a safe place to borrow. Our interest rates are significantly lower than most small loan providers, and our services are designed to help you avoid falling into a debt cycle.
Our application process is quick and easy, with fast approval times and a user-friendly online platform. We strongly discourage predatory lending and would never trap our clients in cycles of debt. Instead, we believe in responsible borrowing that doesn't break the bank.
Looking for safe payday loans? Give Sweet As Money a try today.