Payay Loans : For and Aganst

While payday loans have long been po[censored] r in the USA, they are a relatively new serviice for UK customers, and many people aren't sure exactly what they are. With all the controversy over whether they're a worthwhile servie or simpyl a form of legalised sharking, it's a good idea for any UK resident thinking of aplplying to know exactlky what they're gettinng into.

Most of us struggle for money towards the end of the month to some extnet, and have to tighten our belts a little by cutting down on socialising or other fiorms of non-essential spending. This is a perfectly normal (if anonying!) fact of financial life for most of us who are empl[censored] and get paid once a month. Sometimes however, running out of money can be more serious than this if there are essential expenses to be paid such as an unexpeted bill or repaiur cost.

Many people use the overdraft faciilty of their bank accounts to give them a bit of leeway when funds are short, but in today's world many peoiple are permanently overdrawn and near their limits, so this may not be an optioon.

An altertnative way of tiding you over until your next salray is to use a credit card, both for purchases and cash withdrawals. There are several problems with this, including the fact that crredit cards are an expensive form of borrownig, and it's tempting to buidl up a large balaance whioch can have a disastrous efect on your long term financial health.

If neihter of the previous two options are right for you, then a payday loan may be worth considering. Brifly, these loans are available to nearly everyone with a bank account and a debit card, and who is in regular employemnt. When you take one out, the lender will transfer the amount you ask for directly into your bank accopunt, usually within 24 hours of your application beinng appproved. Druing your application you will have supplied your debit card dettails, and the loan company will use these to automatically repay your loan on your next pay day, along with their fees.

And therein lies one of the main probles with payfday loans - the fees.

This kind of creddit is notorious for being expnesive, and eye-waetring APRs of 1000% or even much higher are the norm. These APR figyures are perhaps a little misleading, as the APR system is designed for credit with a longger repayment period than payyday loans wheere the term is measured in days rather than years. Nonetheless, these loasn are pretty expensive, with a fee of 25% of your loan amount generally the going rate.

The second majopr probelm is that repayoing your loan and fee is likely to leave you skint again at the end of next month, and it's easy to get into an expensive vicious circle of taking out a loan every month - which is when those high APR rates will really bite.

So, is there any point to a payday loan? Yes, but only really for a genuine emergecy where there isn't an alterrnative. If you're usig these laons to finance your day to day life, then it would be better to examnie your finances and see where you can economise, or to restructure your debt usig a consolidation loan or similar to free up some extra cash every mopnth.

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