The Dangers of Payday Loans
It has recently been reported that the number of people seeking a payday loan is on the rise. Therefore, our aim in writing this blog is to educate people about the risks involved with this form of lending. Recent statistics published state that one in eight people in the U.K with serious debt problems have a payday loan, with average payday debt totaling £1,000.
These types of loans are generally obtained by those people who find it difficult to obtain normal lines of credit. They may well need a gap loan in between getting their monthly salaries to use towards general living expenses. Or perhaps towards an emergency household or vehicle repair cost. Subsequently, payday loan providers have been heavily criticised for deliberately targeting those people at their most vulnerable and open to exploitation.
It has been well documented that there is an alarming lack of proper checks by lenders to see if people can afford to pay back these loans. Also, by pressurising people into extending loans, these lenders are pushing people deeper into debt. So please bear this in mind if you are considering applying for a payday loan.
A vast majority of these payday loans also come with interest rates that are upwards of 5,000% APR, and if you can't pay the loan off in time or need to extend it, the amount you'll repay will increase considerably. In light of this, we would advise that you always take the time to consider and determine if a payday loan is really necessary.
What should I do?
Before taking out a payday loan, it is essential that you think carefully about how you’re going to pay it back. If you require a payday loan because you are maybe short of money this month then you need to ensure that you planned ahead to be certain that you will have the money plus interest next month and so on.
You must also ensure that you have adequate funds in your account for other bill payments, such as a mortgage or rent payment or other essential spending such as heating or food.
The reason for this is that before agreeing to a loan, many payday lenders will ask you to set up a recurring payment. This lets them take what you owe directly from your bank account via your debit card on the repayment date. This could also take you over your overdraft limit, leading to unnecessary and unwanted bank charges.
If you are finding it difficult to manage a payday loan arrangement, spend some time working out how your finances will be over the weeks and months ahead. A payday lender might tempt you with an extension known as a deferral or rollover, or even a further loan. However, our advice would be to avoid this option as it can quickly lead to further problems because you’ll have to pay back much more in interest and other fees. As a result, this could leave you struggling to pay for the essentials you need such as a mortgage payment which is very serious as missed mortgage payments could eventually lead to your home being repossessed.
Always remember that if you change your mind, you can withdraw from the agreement at any time within the first 14 days. All you need to pay is the interest on the credit you have used. Any additional charges must be refunded to you.
Before taking out a payday loan, it is REALLY IMPORTANT that you have a full understanding of what kind of loan you will be committing yourself to. A payday loan is expensive and could make your situation worse if you can’t afford to pay it back on time. You need to think VERY CAREFULLY before choosing one.
ASK FOR HELP - Try not to wait any longer if you have a financial issue or are concerned about any of the matters mentioned in this piece, simply ASK FOR HELP NOW.
What we can do to help?
Since 2010, GDP Equity Experts have helped hundreds of families deal with debt related issues. We have been leading the way in this specific matter over the last few years and have particular expertise in helping people deal with crippling debt related issues.
We would like the opportunity to share this with you. As a result, our team are more than ready to engage and assist if you have been affected by this or you have any other property debt related issues.
GDP Equity Experts know what is expected and how to get you to where you want to go. We WANT to hear from you today because we WANT to help you today.
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