Payday loans are a cheaper alternative
One of the major criticisms of payday loans UK is that they are expensive, however they can end up being a far cheaper alternative to many mainstream lending deals depending on what kind of borrower you are. The main reason that payday loans have a bad reputation in some circles is that they are measured by the same percentile system as if they were a long term, loan; using the APR (annual percentage rate). However, they are not year-long loans, they are almost always designed to run for less than a month.
This means that in order for the lender to make money by providing payday loans UK they have to charge a higher, one off interest charge instead of spreading the interest over a longer period. With a credit card, the rate of interest is spread over the whole year and a borrower might opt to only repay their interest over the course of that whole year. In this case, the original debt does not get repaid and the credit card company makes a great deal of money via interest charges.
However, with payday loans the money is paid back right away, on the payday of the borrower, writing off the debt and finishing the deal. That is why a payday loan appears to have high rates of interest compared with other forms of lending. In the long term, however, paying off a payday loan quickly can work out far cheaper than letting a credit card debt accumulate. This is why payday loans can still be a cheaper option than credit cards or mainstream loans, despite apparently higher interest rates.
Working To Lower Debt
If you are working to lower your existing debts and you have a plan in place, rather than ruin or interfere with that plan by increasing your credit card or loan debt, payday loans could provide a quick cash solution if you're low on funds before payday. They are unique, because you have to pay them off on pay day and cannot therefore add them to your existing lending. The only problem arises when people take out payday loans and then don't manage to repay them. That usually incurs a late payment charge or increased interest on the loan.
Dealing With Unexpected Costs
As a way in which to deal with unexpected costs, payday loans fast are good solutions and you can choose how much you borrow, usually between £80 and £750. That means most simple, essential things you might need to pay for, are within reach before your salary hits your bank account and then, once you've been paid you can pay the loan off.
Clearly there are alternatives to payday loans such as borrowing from friends and family which can become complicated, or mainstream lending which can take a long time to organise and can sometimes get out of control, becoming bad debt. If you want a simple loan with a fixed, short term loan period, a payday loan could be ideal.
In order to apply, you need to be at least eighteen years old, employed and living in the UK with a UK bank account. Applying is easy, and just involves putting in some personal information, like contact details, work and salary information and your bank account details. Your application will be secure and confidential, and your loan will not be discussed with anyone else. There are no obligations if you apply, and no charges for application. You will be given all the information up front and clearly, and even if you are accepted, you can simply choose not to agree to the loan.
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