For those of us who are paid on a monthly basis, the days before the next paycheque can be a worry. Bills have to be paid, life goes on, and money is inevitably tight, but what about those life emergencies that occur every now and then? For example, if your car breaks down and you can’t afford to wait a week to get it fixed: this is when a short-term cash loan comes in handy.
Much has been written about how payday loans carry high interest rates, but are they really any more expensive than conventional loans? The truth is that while the interest rates are high, the actual cost of a fast loan is minimal if you borrow the money sensibly; you are, after all, only borrowing a small amount, and for a very short amount of time. The advantages don’t stop there, for these loans are surprisingly simple to access, and the result is money in your account almost instantly.
Research has in fact shown that borrowing a small amount – say £200 – via a payday loan is cheaper than taking out a conventional bank loan. If you keep to the rules by paying the loan back when agreed and you avoid any potential penalties such as missed payments, you can have instant money for that emergency at an affordable price.
Most people who take out payday loans do so because they need a small sum of money for a short time – a week or two is generally the maximum time that a loan is secured for – and the agreement is to pay it back on the date you get paid. This will be done automatically by direct debit as soon as the money is in your bank on your payday or another previously agreed date.
Many such loans – and there are plenty of companies offering them nowadays – can be secured simply by filling in a quick online form, and acceptance is agreed on the spot often within just a few minutes. Many offer small loans that do not require any security, and some are willing to lend to people with poor credit ratings. The general case is that the first amount you can borrow will be limited, and if your loan is repaid successfully and on time, future borrowings can be for greater amounts.
Payday loans are quick and convenient, cheap and useful, and are not the vastly expensive option that they are sometimes portrayed as. Careful use – borrow only what you need, when you need it – and consideration make taking out payday loans a very sensible way to borrow money for those moments when you need to, such as if you can’t make the payments you need to for household bills or other essentials.