Payday Loans : Sharking under any other name?
The internet is awash with sites promising a quick fix to your financial worries with a cash loan to see you through to your next payday. Originally a USA phenomenon, there are now more and more sites offering UK payday advances.
If you're struggling to make ends meet then such a loan could seem very attractive, but make sure you go into the deal with your eyes open.
Payday loans are expensive. VERY EXPENSIVE!
Depending on how much you borrow, and over how long, you could see ludicrously high APR figures of 1500% or even much more. This is because you're charged a flat fee of usually 20% of how much you borrow, even though you may be only borrowing for a week or two. Scale this over the 12 months that APR is calculated over and it's easy to see how these high figures come about.
The other major problem with a payday loan is that if you use it to finance day to day expenses rather than to meet a one-off bill, it's easy to become trapped into having to renew your loan every month, and pay a new set of fees every month too. This can rapidly make a bad financial situation even worse, and it's here that payday loans start to resemble sharks, mercilessly preying on the financially vulnerable.
Of course, there's nothing illegal about payday loans so long as you're made aware of the costs involved, so if you desperately need a fast cash injection then by all means apply.
Just don't use them as a band-aid to disguise the fact that your finances don't add up...
If you're struggling to make ends meet then such a loan could seem very attractive, but make sure you go into the deal with your eyes open.
Payday loans are expensive. VERY EXPENSIVE!
Depending on how much you borrow, and over how long, you could see ludicrously high APR figures of 1500% or even much more. This is because you're charged a flat fee of usually 20% of how much you borrow, even though you may be only borrowing for a week or two. Scale this over the 12 months that APR is calculated over and it's easy to see how these high figures come about.
The other major problem with a payday loan is that if you use it to finance day to day expenses rather than to meet a one-off bill, it's easy to become trapped into having to renew your loan every month, and pay a new set of fees every month too. This can rapidly make a bad financial situation even worse, and it's here that payday loans start to resemble sharks, mercilessly preying on the financially vulnerable.
Of course, there's nothing illegal about payday loans so long as you're made aware of the costs involved, so if you desperately need a fast cash injection then by all means apply.
Just don't use them as a band-aid to disguise the fact that your finances don't add up...
Payday Loans : Sharking under any other name? posted by Nicholas Hunt at 4:24 AM
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