Payday Loans – Debt Solutions or Debt Problems?
If you’re in debt or have a cash flow issue, more and more people are turning to Pay Day Loans. So what is a payday loan? Exactly what it says, a lender will loan you a sum of money to see you through until your next pay. People often use them as emergency debt solutions as payment is quick and usually made within hours, sometimes within the hour.
These small loans are also attainable if you have a poor credit rating as payment is made upon proof of your employment rather than proof of credit. Whether this is good debt advice is a matter of opinion. They say ‘nothing comes without a price’ so don’t be surprised at having to pay an extortionately high rate of interest on top of your original sum borrowed.
Payday loans are considered to be one of the most expensive loan options available so it would be advisable to thoroughly check the interest rates of each company before applying. There may be other debt solutions available to you. If you want to go down this route, once you have been accepted for a payday loan and the interest rate is affordable for you, the company will ask you to postdate a cheque for the day after your payday.
The cheque will be made out to your lender for the full amount that you borrowed plus the interest fee. The internet has made this process very easy and with a few clicks of your mouse, your requested sum of money can be deposited into your account within hours. However, you must pay back the full cost of the loan, so you cannot spread payments over a set period.
There are strong repercussions if you cannot afford to pay back your original sum plus the interest. The lender may agree to carry the loan over for another month which may be a temporary solution, but you will incur a further interest fee. This could have a crippling effect to your wages the following month, as you may find it very difficult to pay off this ever increasing sum.
Payday loans are relatively easy to acquire and only require limited proof such as pay slips, a bank statement and a current utility bill. They are ideal if you can comfortably pay back the sum you initially borrowed along with the interest fee. If you borrow more than you can comfortably repay, this sort of loan will turn into another debt which could lead to your financial demise.
Debt Advice News posted on 30/05/2007 14:28:15
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