Tag Archives: loan company

Why Not To Use a Payday Loan

April 12, 2020   Auto Loans

Payday loans may be fast and easy to obtain but before you sign on the dotted line it’s not just the high interest rates that you need to consider.

Originally the form of lending known as “Payday Loans” originated in the USA and has now landed on the shores of the UK – spreading at an alarming rate.

Payday loans are short term credit loans that are repaid in full on the day that you receive your salary from your employer. Payday loans are really designed to get you out of a ‘fix’ when you find yourself short of money before payday but they do have an extremely high interest rate attached to them.

A typical example of this would be that you borrow £100 but repay £130 or £140!!

When you take into account that a Payday loan is a fairly short term form of lending, the interest rate is a great deal higher than other forms of lending.

Now it may just be that you find yourself in desperate need of a small loan and a Payday loan will fit your circumstances. What you will need to bear in mind is that if you are short of money one month and you borrow money in the form of a Payday loan then you will need to pay the original amount that you borrowed, plus the interest.

This may have a ‘knock-on’ effect of then leaving you short of money again. When faced with that situation you may be tempted to turn to the Payday Loan option again and this is where the hidden danger is waiting for you.

Let’s say that you borrowed £200 one month and on your payday you paid back £260. This would leave a £260 hole in your wages which could temp you (or leave you no other option) but to use the Payday loan option again and borrow another £200.

This is the start of a vicious circle that many people find themselves trapped and the payday loan hidden trap will have snagged another victim.

Each month when you repay the £200 loan you are paying £260 out of your wages – this leaves a £260 hole in your wages – so you borrow £200 again to ‘fill the hole’.

Then the process repeats itself again when you have to repay £260 on payday – you’re trapped in the Payday loan circle of debt.

The loan company lend you £200 once – it’s the same £200 the re-lend you each month – and for this pleasure you are paying them £60 each month when you repay the loan.

Over a 12 month period you will have paid the loan company £1,200 for basically borrowing one lot of £200.

It is a very harsh reality for many people who unfortunately have no other option and are unable to get out of the circle. If you are considering a payday loan then carefully think about what you are getting in to before borrowing any money.

If you have no other option and are 100% certain that you will have enough money to repay the loan without it affecting the next months finances then a payday loan could be your only option.

Otherwise don’t fall into the payday loan trap. Try and get through or ask a friend to lend you some money – even if it isn’t as much as a Payday loan company – it will be cheaper when it comes to paying it back.

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Payday Loans in the UK are Convenient

August 4, 2019   Loan Tips

Payday loans are a vital source of credit for many low income earners and others in the UK who don’t qualify for loans or who have poor credit. A payday loan is a quick convenient form of borrowing that meets the real needs of UK consumers.

That has traditionally meant that most Brits would have to turn to family for emergency funds. In modern times however, people don’t like turning to family for short term loans and many don’t have family local. We all encourage others to be independent and to be conservative with money and live within one’s means.

In reality, our monthly bills can come unexpectedly. Bills for car repairs, medical treatments, clothing, or home repairs can’t be put off even though we have no money. Because of the global recession banks are even less reluctant to fulfill the short loan requirements of UK consumers and workers. The banks however don’t necessarily want to let competitive financial services provider enter the lending business.

New payday loan lenders have arrived on the scene to fill this loan market void. Detractors of payday loan lending cite high interest rates as a big problem. Each payday lender has their own set interest rate and borrowers are advised to look for the best loan interest rate they can get along with lower transaction fee costs. Payday loan lending rates vary from 738% to 2200% on a yearly basis if they debt is carried forward each month. If the loan is taken for short terms, the actual cost is fairly reasonable.

The payday loan application process is straight forward. This is an area where borrowers should pay attention to as well. Some UK payday loan companies are open to make applicant a customer but this isn’t wise. Many people who apply for payday loans have been turned down many times before because they don’t qualify. Someone who is about to move or lose their job often a bad candidate for a loan. A responsible and ethical payday loan company will only take the best available candidates. A company that caters to these trouble account often end up having aggressive interest rates and collection practices that give the industry a bad reputation. They are the problem.

If you apply for a payday loan, be aware of the company’s’ credibility and how they conduct themselves. If they treat you with disrespect and don’t conduct due diligence on your acceptability as a borrower then you can expect they will be inundated with bad borrowers. Some has to pay for all those delinquent loans and their customer service too will be geared toward dealing with soon to default borrowers. A payday lending company that takes a few days to accept you and asks you to fill out and send in forms is obviously a better bet. That short extra time means you’ll be in good company and you’ll get the best payday loan rates possible.

If you have to fill out forms to complete a payday loan account and are required to wait a day or two, do it. Do business with a payday loan company you can trust.

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