Payday Loans Are They Ever The Right Choice?

28 March 2012 16:00 - Victoria Wedderburn


Payday Loans Are They Ever The Right Choice?

Thousands of people in the UK have been turning to payday loans but why? Payday loans are unsecured short term loans designed to cover you until your next pay check comes through. APRs on payday loans can be very high which is why they get a lot of bad press. However, recently payday loans have become increasingly popular particularly as the cost of living increases putting pressure on household spending. The problem is however, if you fail to repay what you owe when it is due, the high interest rates can cause the amount you pay to soar which could leave you with a massive bill that can spiral out of control.

Payday loans should not be used for casual spending because they are expensive because of the high interest rates. Payday loans should only really be a last resort. Payday loans can be used in some situations and can help people avoid overdraft charges or cope with emergency spending. Generally the reason why most people take out a loan is to pay a bill, or for an emergency like urgent home repairs such as getting your boiler fixed. They are designed for those who have an unexpected expense that they need to pay and they cannot wait until payday. With this is mind payday loans are best used to get you out of a tight financial corner.

Remember that payday loans should never be used as an everyday way to borrow money or to solve long term financial difficulties.

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