7 Things to Consider When Applying for a Payday Loan

If you are going through tough circumstances, payday loans may sound a tempting option to you. But if you are not an experienced person, we suggest that you consider this option after a lot of thinking. Since these loans feature a very high interest rate, they shouldn’t be taken unless you have no other option. Below are 7 tips that may help you make an informed decision.

Financial charges

The amount of loan you will get is a lot lower than what is written on the check. The reason is that finance charges are deducted from the amount, so you will need to write a check plus these charges. Not doing so will result in a higher rate of financial charges that you will have to pay. Most people get into even bigger trouble when they fail to pay the principal amount along with interest. So, make sure you know how much you are getting and how much you will need to pay back down the road.

Paying back

If you don’t have enough funds in your account to pay back the loan, you may try other options. For instance, you may renew the loan amount or consider taking out another payday loan. But keep in mind that this new loan will have its own financial charges and extra fees. And the extra fees are actually incur because of late payment of the amount of loan.

State Regulations

In each state, regulations are different for payday loans. Usually, the term limit is not more than 30 days. The problem is that lenders often issue loans that feature a longer term limit. In this case, you are at the lender’s mercy, which is a situation you may not be willing to go through.

Cash crunches

As said earlier, the purpose of a payday loan is to deal with a temporary financial crisis, and we have to pay back the loan as soon as we are out of the financial trouble to avoid high interest and fees.

So, it is not a good idea to be tempted by the “roll over” trend or you may have to pay a huge sum at the end.

Financial position

Usually, these loans are for borrowers with lower incomes as they can’t afford to borrow from other sources. Here, it is important to keep in mind that lenders don’t usually take into account the financial position of those who are applying for the loan. So, you have to think harder before opting for this option.

Automatic rollover

You need to be aware that there are some loan sites that tend to rollover the loan amount automatically. And then there are sites that have some contractual agreements that state that you, the borrower, do not have any right to file for bankruptcy or file a lawsuit against the lender.

Approval

A great characteristic of payday loans is that they are easy to get, meaning the approval process is quite easier than other types of loans. So, most borrowers find them quite tempting, but you should be careful and only opt for this option if you have no other choice left.

You may say that opting for a payday loan is a good idea to deal with a temporary financial crisis, but a hasty decision may get you in a bigger trouble. If you don’t be careful enough, you may end up in a vicious circle of debt. Therefore, it’s better to pay back the loan as soon as you get your hands on some extra cash. Hopefully, keeping these tips in mind, you will take this decision.

When Ghana’s Central Bank Cracked the Whip Amidst An Unstable Sector With Too Many Banks

Ghana’s Central Bank continues in its effort to sanitize the banking sector. Notably, among some obvious sanctions it has carried out has been the mandatory takeover of two private-owned banks: Capital bank and UT bank back by the state-own Ghana Commercial Bank under the authorization of the Bank of Ghana in 2017. Other activities have been carried out by Ghana’s Central Bank yet, the sector still needs some stability. Currently, Ghana’s banking sector is unstable though its prospect looks good in the not too distant future should major regulations and activities are carried out by the Central bank.

The sector still nursing it wounds over last year sanctions on the 2 banks, yet another bank has experienced the central bank direct sanctions, thus, Unibank, (It was adjudged the 6th best performing company in Ghana at the Ghana Club 100 awards in 2017). Currently, the country`s Central Bank has announced that as at 20th, March 2017, it has mandated and authorized the Management of Unibank, ( privately owned bank) be dissolved and taken over by KPMG. Interestingly!

Now, Bank of Ghana itself needs some house cleaning. It is very unacceptable to superintend over a sector from which a player is adjudged 6th best only for it to be said to have been withholding some important data. The Central Bank, however, has its defense for the action against Unibank that the bank has persistently maintained capital adequacy level ratio close to zero which agreeably could practically mean Unibank is insolvent. Reports from the Central bank stated that it directed Unibank to desist from granting any additional new loans to customers, however, the Bank failed to comply with the directive and continued granting new loans. Also, Unibank was directed to desist from incurring any additional capital expenditures which they (Unibank) didn’t adhere to thereby, breaching section 105 of Act 930.

Admittedly, Unibank has been a creative bank if one should observe their banking activities over the years from a distance, as such, the Central bank and KPMG guide to the bank should be one that will not dissolve their positive employee-customer culture which is readily seen to be “vibrating” among their customers and bank. Unibank has some very loyal customers, with large numbers being traders. Bank of Ghana, therefore, should guide Unibank, taking into consideration the brand that exists and finding the obvious ways to revive the bank.

Having said this, the number of Universal banks is way too many for Ghana. The number should be capped as having close to 40 banks for a population of 26 million is obviously much. What needs to be done is to build the capacity of existing banks to “branch out” to customers. This can be done in two ways: expanding physical infrastructure to reaching closer to customers and expanding digital (Online/Mobile banking) infrastructure. Already existing banks should be keen on improving their service experience, getting closer to people, expanding digital means of banking and improving on banking security.

Making it clear, however, I am not in any way against the registration of banks, In fact, my position is the direct opposite as I am not oblivious of the importance of financial services to individuals and the economy as a whole. My position will pass for the opposite. My views clearly are that instead of registering new banks that with some of them operates a few branches with no superior services or infrastructures, it would be better to resource existing banks to improve their capabilities.

Finally, some of these financial institutions will have to consider merging should there be any possibility of staying profitable in business and serving customers at standards as the sector begins to become more competitive in the coming years and also especially now that the minimum capital requirement has been increased by the Central Bank to 400 million Ghana Cedis for banks, which will take effect from December 2018.