Payday loan companies are coming under more and more scrutiny and this for the most part should be considered a good thing. There are far too many hidden charges and extortionate rates which consumers can be naive of.  However, the theory behind a payday loans is in itself not a bad thing. For people who have bad credit and need a bad credit loan a payday loan means that they can avoid going to loan sharks on the street who are totally unregulated and can provide any terms they like.

However, the problems arise when the consumer feels they are being taken advantage of by payday loans lenders or brokers they cannot pay back. These days the rate of interest and how much a borrower needs to pay back should be very clear. It is also clear that if a borrower cannot pay a loan back on time extra fees will be incurred. In this way the borrower must take responsibility for their actions and if there is any doubt as to whether a loan can be paid back it should not be taken. However, it is also up to the lender or broker to make the rules as clear as possible and if loans are defaulted on, borrowers should not be encouraged to take out other loans.

The extra regulation regarding payday loans should be to emphasise clarity. The consumer should be encouraged to shop around and find the deal which is best for them.  Bad credit loans should not be taken instantly and time should be taken to work out exactly how much a consumer might need to borrow, how long for and how much they will have to pay back on the allotted deadline. If these considerations are taken then there would be fewer issues for borrowers and lenders alike.