PayDay Loans Up
Published / Last Updated on 13/08/2010
by Ashley Clark, Director
According to a consumer watchdog group, payday loans i.e. a short term loan to see you through until your next pay day are up with over 1million people in the UK using such facilities.
Whilst perhaps not a popular description, we liken payday loans to be bordering on using a loan shark.
If you can afford to pay the loan back on time when you should then it may prove cheaper than usual overdraft extensions or credit card.
If you do not then some loan companies charge astronomical interest rates. Some as payday loan companies charge as much as 1.5% per day for late payments or top up fees for extensions. This does not seem much but 1.5% per day equates to an annual rate of 2,300% pa.
In our opinion, pay day loans are a legitimate short term loan solution provided you know what you are doing.
- Use payday loans to your best advantage i.e. as a one off cash flow issue
- Do not use payday loans if you cash flow is deep rooted and likely to remain the same or get worse – you may just end up being trapped in another credit spiral.
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