There has been a great deal written about short term loans, and most of it has been less than flattering, both to the industry and to its customers. Fair or not, the stereotypical view of the customer is of someone who probably doesn’t deserve credit. The lender, on the other hand, is stereotyped as being a half-rung above a loan shark on the financial services ladder. As a matter of fact, there was a move a few years ago to ban no credit check payday lenders altogether, but the movement failed quite miserably, due in large part to the objections of a very influential industry and its many customers. To the cynic or the snob, it would seem to be a match made in someplace south of heaven.

The truth is that fundamentally, a payday loan is just like a loan taken out at a bank. You borrow money, with a promise to repay it according to an agreed-upon schedule, and you offer some type of assurance that you will keep your promise. Just like the big guys. Where the no credit check payday loan differs is in the details, and these details can be significant. But first, let’s take a hopefully objective look at both the industry and its customers, and at the potential for good and abuse that is present for both.

Like any industry, there are reputable companies and hustlers

There are plenty of reputable lenders who offer no credit check payday loans, and who are satisfied with the advantage of being able to charge higher interest rates than they can through more traditional vehicles. The bad marks on the industry are primarily due to lenders who either abuse their customers with collection techniques that border on extortion or who go out of their way to encourage their customers to engage in irresponsible (and expensive) behavior. One blatant example can be found in lenders who strongly encouraged their customers to let their loans roll over multiple times. For a little while, it might have felt to the customer like they didn’t even have a debt, but after the loan was refinanced repeatedly, the interest amount alone became so large that it became almost impossible to repay, leaving the borrower eternally indebted to the company. Thankfully, new rules for payday lenders, enacted in 2014, rendered this practice illegal, though some unscrupulous lenders, operating under the regulatory radar, continue pushing customers to keep rolling over their loans.

It can be very difficult to tell, at first glance, which no credit check payday lenders are reputable, and which are sharks. Most lenders maintain an online presence, and their websites might look just as professional as do the websites maintained by the major banks. And while online appearances can be deceiving, there are resources such as the Readies website that allow consumers to compare the rates and requirements of multiple no-credit-check payday lenders, and better determine which lender is best for them.

Not all borrowers fit within a single mold

If one forms an opinion based upon the adverts on television, it is easy to assume that all short term loan customers are working class people who need a few extra pounds to handle an unexpected expense or to tide them over until their next paycheck. Even worse, some people tend to apply the kind of judgmental approach noted earlier, painting every borrower as being irresponsible, at best. Frankly, such an assumption would be wrong. Especially since the economic crisis, business loans from traditional lenders have become increasingly difficult to obtain, and the time required to process the loan can often result in a lost opportunity. As a result, even large companies find themselves taking out no credit check payday loans, whether to pay for material that is needed on short notice, or to allow the company to avail itself of a discount that will no longer be available by the time a loan application for funds has been processed.

In short, a short term or payday loan can be either an essential tool for a responsible borrower, or a rung on the ladder to financial ruin. Like any tool, it can be either used or abused. The trick is to fully understand the strengths and limitations of the tool, and to learn to use it correctly.