Payday Loan Lenders Branching Out to Offer Six-Month and One-Year Loans

As thousands of critics and consumer groups do their best to rid the world of payday lenders once and for all, more services are beginning to offer longer-repayment terms which blur the line between payday and standard personal loans. Once again, the debate rages as to whether or not such cash loans should be offered, or even allowed by regulators, given what many have dubbed "outlandish" rates of interest.

Payday loan companies are now offering small sums of cash in the form of 12-month same day loans – APR figures averaging out at around 278%. According to the lenders, the loans represent incredibly valuable, important and simple financial services for those unwilling or unable to jump through the usual hoops of the major lender.

These loans – like the standard same day cash loans – are offered in an instant, demand no credit checks and can be applied for 24/7.

On the other hand however, critics are once again arguing that the benefits simply do not outweigh the costs.

To put it in simple numbers, a £500 loan taken out at 278% APR over the course of a year will equate to a total balance of just over £949 – or £79.09 per month if you prefer. This means that on one hand there is the argument that £449 interest over a year is too high, but on the other there is the ease of paying back £79 if the cash really is needed and needed fast.

By contrast, taking out £2,000 with the Post Office over the same year would accrue a mere £154.60 in interest, though this doesn't help those with poor credit ratings, inability to verify their employment or simply those that do not have time to wait for a payout.

The simple though underlying truth is that the payday lender continues to locate and tap various gaps in the market that until present have been entirely overlooked or neglected by major lenders. And while ever this continues to be the case, payday loans will continue to play an important role in the lives of so many.

Year-long payday loans are a natural evolution of the standard variant, therefore until major lenders begin offering short-term loans and immediate payouts at lower rates, the payday lender's place in the industry is all-but guaranteed.

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