Payday Loans: A solution to a short term cash flow problem?
If you’ve been forced in to a tight financial corner before your next payday due to an unforeseen circumstance such as a broken boiler or a cracked windscreen then a payday loan could be a great solution to your short term financial problems. A great feature of a Payday Loan is that the lenders often disregard an individual’s credit history as an eligibility factor in the lending process, with little or no credit checks taking place during the application process. Payday loans have essentially been designed with the employed individual in mind. Payday loans lenders work on the basis of lending small amounts of cash, varying between £50 to £1000, to individuals before their next payday or within a thirty day bracket. Many Payday Loans will have the option to roll over the agreed term for two or three months but be careful to read the terms and conditions of this option as often after one month the interest rate tends to sore.
With high acceptance rates and cash being deposited in to people’s accounts often as quickly as on the same day or within 24 hours, you might be inclined to think what the catch is? The main disadvantage to this type of loan is that the Annual Percentage Rate, or the APR, tends to be very high and therefore the loan is very expensive. In response to this it is important to remember that these types of loans are short term. Essentially the shorter the time period it takes to pay back the loan, the less interest you will have to pay on it and ultimately the cheaper the loan is to the individual. Before you take out a payday loan it is therefore vital to make sure that your income from your next payday with be able to cover the cost of the loan as if you are unable to make this then taking out a payday loan could force you in to a downward financial spiral.