May 10
British citizens are continuing to tighten their belts as the financial crisis hits reign and the recession deepens. However it is no surprise that people are getting caught out financially and the demand for Payday Loans is escalating. In conjunction with this the growing demand for Payday Loans bad press is circulating on this topic at an equally impressive rate.
Why is there an increasing demand for this type of loan?
Payday Loans are an extremely popular financial product as they help individuals out with a financial emergency before their next payday. Loan amounts can vary from anything to £50 to £1000 and can be deposited in to your bank as quickly as an hour. This type of loan therefore means that if an individual has to pay for an unforeseen circumstance such as a cracked windscreen or a broken boiler they can be tide over till there next payday.
Why has the media attacked Payday Loans?
Payday Loans have received bad press essentially because the interest rates on these types of loans tend to be very high. Payday Loan lenders argue that interest rates are high due to the short term nature of the loan and the higher risk they take when lending to individuals with poor credit ratings. The main issue with Payday Loans is that they currently face a much lower regulation than other financial products, therefore allowing lenders to charge whatever interest they like. In addition to this there is an argument that people with poor credit situations are being taken advantage of. Tighter regulation on Payday Loans must be enforced in order to stop people in poor financial situations being exploited; one way to get around this would be to put a cap on interest rates which would reduce people from spiralling in to uncontrollable debt.
Apr 27
Payday loans are available to almost anyone
The popularity of payday loans has soared since the financial crisis and now that Britain has just gone into a double dip recession payday loans are likely to become even more popular. The reason for this is that during a recession or periods of economic decline the banks become more reluctant to lend. If you have bad credit this is not good news as banks are highly unlikely to lend to you. During an emergency this can be a disaster which is why some lenders now offer payday loans. Payday loans are short term loans of up to £1000 which can be borrowed by almost anyone even if you have bad credit. A payday loan company will still perform a credit check but even if your credit history is poor you can still be eligible for a loan. You will need to provide bank account details to the lender when you borrow and when your next payday comes around, usually within a month the lender will take the money they are owed from the bank account provided.
Payday Loans can be expensive
Payday loans should only be used in exceptional circumstances. This is because they are very expensive. The APR on payday loans is extremely high in comparison to almost every other type of loan. Because payday loans are available for people with bad credit the lender takes a much higher risk in lending to the bad credit borrower. The high interest on these loans essentially covers the lender’s risk in the case of some borrowers defaulting. If you do take out a payday loan it is really important that you pay back the loan on time. Payday loan companies are notorious for charging extremely high penalty fees and charges for those who default. Do not let the loan roll over into another month or the interest you will have to pay on the loan may spiral out of control.
