When the Wheels Fall off Should you Reach for a Payday Loan?

Some of us manage to navigate this tightrope of cash in and money out, but occasionally the wheels DO fall off.

It is impossible to attend to any emergency when your wages or payday is days away. However, shorter term borrowing is on the increase making it easier for customers in the UK to get a cash advance on their wages.

Online loan businesses are helpful in these hard economic times, where almost every penny of your wages goes accounted. Like any other business, these loans are not short of controversies.

Controversy

These businesses operate under the scrutiny of the Office of Fair Trading. This means that they have to adhere to certain regulations in their operations. Therefore, you will not have part with a large chunk of interest when repaying your loan as the interest rate is within a permitted range.

In addition, you will not be repaying under a compounded interest. See simplepayday for details. This translates to the fact that the principle amount you borrow will not grow in spite of the repayment period. The interest will also not increase but remain constant.

You cannot borrow any amount of money you wish to borrow, as the average minimum amount is about £300. The maximum amount you can borrow is £1000 from most lenders. This way you only get a loan of what you can manage to pay back on your next payday.

Getting approved for a loan

This form of credit is not guaranteed to all the applicants. Once you fill the online application, the lenders take some time to review it. Some lending companies will not request for bank statements and pay slips. Nevertheless, all the lenders require that you provide your bank account and personal details. These details provide proof to the lenders whether you can afford to repay the loan accorded to you. The lenders cannot extend loans to people who maybe not in a position to make repayments as this would only lead to the companies' losses.

Furthermore, you cannot borrow more than once and expect approval. Even though you may have repaid your loan in good time, most lending companies insist that your application must undergo scrutiny each time you decide to borrow.

Conditions for application

Payday loans are only available for the employed and not the college going UK population. This is because the latter cannot afford to repay in the immediate future since they are not working. Besides, the amounts extended in terms of fast cash cannot cater for education since they are too little.

In addition, the amount accorded is little to ensure that you do not struggle when paying back on payday. This way you remain with enough money on your check to discourage you from borrowing again. You can choose the best lender that meets your needs from an array of choices.

Stop. Think.

How much will you really end up paying back? The rates for payday loans are not cheap and they shouldn't be. An online loan is a convenience and lenders want a return on their investment for providing such services. They are in business, like everyone else is, to make money.

Make no mistake; the payday loan industry is big business. Lenders make a ton of money and the latest news indicates that the increasing demand for payday loans has even created more jobs in the industry. While others are being laid off or having their hours or wages cut, payday lenders are hiring more employees.

While there is nothing wrong with obtaining an advance if needed, when you know it's a one-time thing and you can pay it back quickly, remember that you will have to pay a premium for the service. This premium is why debt can add up all too quickly when loans are not used with care.

Your next check goes to pay back the loan including any fees that have been acquired, leaving you with little money for that pay period. Will you end up taking out another payday loan to get through the week or the month? You can see how quickly this scenario can spiral out of control. A quick cash loan is a tool but like most tools, it should be used responsibly.

It has been shown that increasing numbers of consumers are piling up debt by taking out quick loans too often and they do so frequently for frivolous things. Many spend like there is no tomorrow and then have difficulty paying loans back without getting behind on other commitments. While payday loans can be used in an emergency, they are all too often used for instant gratification. Many consumers want stuff and they want it now. This leads to debt that is very hard to control.

If you do need quick cash, do some research and seek the most reputable resource before obtaining an advance on your paycheck. Compare lenders and look for the best deal. Find out exactly how much you will be required to pay back.

When it comes to payday loans, use this tool wisely if you must, but always try to avoid spending money you don't already have. Growing debt can be a very difficult situation from which to recover and borrowing more money will just get you in deeper.

For help with debt visit https://www.stepchange.org

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Created on Sep 10th 2019 08:41. Viewed 658 times.

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