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PayDay loans

Payday loans are specifically designed for people with short term cash flow worries or problems. If, at any point in the month, you find yourself a little out of pocket, for any reason, and have unexpected bills or just a serious shortage of funds, you can apply online online for help via payday loans. This type of short term borrowing option is worked out to give you the relief needed in case of emergency, or actually, for any reason, you may need a quick cash advance.

There are some massive pitfalls that you need to be aware of when considering opting for a payday loan. Firstly, this form of borrowing is designed for people that have trouble getting credit anywhere else. Which means it is high risk for the lender. Thus, higher rates of interest are immediately charged.

Second, most payday lenders will not let you pay the interest charge and pay a little bit off the amount advanced to you to help you bring down the monthly interest charge. Now, whilst you might see all the adverts stating that,

“Mr X borrowed £200.00, paid it back within one month and was only charged £40.00”, you have to be wary that it is very easy and tempting not to clear the whole amount, and only pay the interest charge, or in the worst case not pay anything at all. This means you are quickly falling into the payday loans interest trap that you see reported in the press over and over again.

If you only pay the interest charge, then you have to pay it again the following month, so you have to pay another £40.00 the following month, or if you didn't make the payment, £80.00. Within five months it possible and likely that you have, or will have to pay back double what you borrowed on your initial cash advance.

Most payday loan companies APR (Annual Percentage Rate) is between 1500 and 2000 percent. That means you could actually pay back £4000.00 on a £200.00 cash advance if you only pay interest payments over a year.

We are not saying here that payday loan companies are crooks or con artists. When you use this form of short term funding correctly, it is a quick and convenient way to get hold of money when you have a cash flow problem. The problem is, many people are borrowing this way, and asking for more than they can afford to pay back, or in some instances, falling fowl of another unexpected bill the following month and ending up stuck in the trap.

If you are adamant that a payday loan is the only option for you, before applying, check your finances. Make sure you have enough money the following month to completely repay what you borrow. If it looks like you don't, don't apply thinking that 'something will turn up'.

If your finances look good for the following month, and you do apply and get accepted, then make sure you clear the whole amount borrowed along with the interest payment as soon as your salary clears in your bank account. Like we said earlier, if you are smart before borrowing, it can literally save you thousands of pounds and minimise stress levels further down the line. Good luck finding payday loans lenders.