Are you frustrated because your car has just broken down? Maybe your boiler has packed in? You’re 3 weeks from payday, your bank balance is low and you’ve got no idea how to cover the cost of the repairs. The stress these factors cause is affecting the rest of your life. That’s where payday loans step in.
Payday loans are a type of personal loans that were designed to provide the convenience of borrowing over short periods or during emergencies. The original purpose was to cover you for one month until your wages are deposited, and some even offered reasonable weekly payments, but many lenders have now changed their service to benefit customers. Allowing them to repay their loans over slightly longer periods of 3 – 6 and even up to a duration of 12 months in some cases.
Where loans are repayable over shorter periods, lenders charge higher fees for borrowing. It’s not uncommon to see products with APRs of over 1000% but it’s important to remember that APR refers to the annual percentage rates, these products rarely offer borrowing over 12 months so the actual amount repayable will look quite different. Interest is capped at 0.8% interest per day or 100% of the total amount borrowed. Default fees are capped at £15. So, for example If you borrow £200, the maximum you can be charged in interest is £200.
Any customer looking to borrow instant payday loans should carefully consider their options as it’s expensive to borrow. Especially when compared to other types of personal finance like guarantor, secured or unsecured lending. Meaning, it could be easy to run into significant financial difficulties if you’re not capable of repaying any money owed to your creditors.
How do payday loans work?
When you apply, you choose the amount you …