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Oct 1, 2019

What You Should Know About Payday Loans

With the many options for taking out loans, one option you may want to consider is a payday loan. Payday loans provide immediate cash to help you out until your next paycheck. But, is this really in your best interest?

A payday loan is a very short-term loan with a small amount of money being borrowed. Typically, a payday loan will not exceed £1000. The catch with a payday loan is that you are expected to pay it off on your next payday, but with additional fees.

This kind of a loan should only be taken out if you know you can pay it back by the time you receive your next paycheck. A payday loan is in place to help people out with quick emergencies that can help them remain on their feet.

When you take out a payday loan, it is usually expected that you will write out a postdated check in the full amount of the loan with the added fees attached to the loan. Lenders may also ask to electronically remove money from your bank as another alternative.

While payday loans offer the quick relief that you need to help out your situation, if you are not prepared to pay it back quickly, these can be dangerous loans. Borrowers should expect a high annual percentage rate that will really increase the cost of the loan if not paid off in time. If you are unable to pay back the loan in the allotted amount of time, borrowers can also expect to be charged additional fees such as late fees, rollover fees, and nonsufficient funds charges.

However, if you fully expect to have no problem making the full payment by the time your next pay stub comes out, a payday loan is a great way to take care of a problem in a rapid speed of time. Understanding your financial situation should help you make the best loan decisions possible.

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Representative example: if you borrow £550 over 18 months at a flat rate of 180% per annum (fixed) with a representative 770% APR you will make 18 monthly payments of £113.06, repaying £2,035.08 in total. Rates from 45.3% APR to 1721% APR. A short term high cost loan should not be used as a long term solution. We are a broker not a lender. We don't charge fees. We don't sell your personal information. We may receive a commission from the lender.

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