When you need money quickly you might be tempted to get a payday loan, but not knowing how they work, be put off actually going through with it. Can you really trust payday lenders? They seem to be a little too eager to make loans sometimes, not like banks which seem a lot more reticent to make a loan usually. You’ll certainly find lots of lenders though, for example http://www.guaranteedpayday.co.uk. But are they a good option or not?
Are Payday Loans Too Expensive?
That is something that only you can say, whether in your opinion they are expensive or not. Certainly if the question is whether they are “too” expensive, that is a very subjective matter. What can be said, however, is that if you are only looking at the APR then you are not getting a good idea of how much the loan actually costs.
The time when knowing the APR is useful is when you want to know the amount in interest you’ll be paying every year. This can be good to know for accounting reasons, and also to compare different loans that operate over similar time scales. The only time, really, when the APR is not going to be useful, is when you are looking at a loan that lasts for much less than a year. That is of course the case with a pay day loan.
What you have to do to find out how much they are actually going to cost you then is go on their website and see what the charges will be. You might as well just look and see how much you’ll be expected to pay back, as it all has to be done in one go. The actual interest rate in that case is not so useful as you’re only making one payment.
Why Are Pay Day Loans So Fast?
There is an assumption made sometimes, given that a pay day loan is so expensive, they make it fast to try to tempt desperate people into taking them out. If they are not actually as expensive as you might have thought they were then this model doesn’t really make sense anymore. In which case, what does account for the fact that they are making the loan so quickly?
If you look at the nature of what a pay day loan is, then you can see that they have to be made quickly. That should be quite obvious from the fact that they have to be repaid in such a timely manner. If it took three weeks to get the loan, then you’d only be able to have it for a maximum of a month. What’s more, you often need them in an emergency so that would not make any sense at all. However, what still has to be answered is whether this is an irresponsible practice or not.
On the question of responsibility, they are actually being more responsible than you might think as well. As the loan has got to be paid back from your pay cheque at the beginning of the following month, what else do they need to know except for how much you are paid? They don’t really need to know anything else to know whether you can afford it or not, so that is pretty much all they tend to ask.
Are Pay Day Loans Useful?
The question of whether you should use one or not will come down to your personal circumstances. On the whole though, if you can afford to pay it back on time and you need the money urgently, they tend to be a pretty good deal.
There’s certainly a lot more to learn about payday loans and Aiden Evans, who has expertise on the subject, has written about them in more detail at http://www.guaranteedpayday.co.uk.
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