There has been a lot of bad press concerning payday loans recently, with a number of problems or faults having been identified. Whilst payday loans are not always the best option for individuals this does not mean that they are without their benefits. So, why have payday loans received such bad press recently and what is the other side to their story?
The first thing to remember about payday loans is that they are only intended as a short-term solution for people with financial difficulties. This means that they are unsuitable as a long term solution and should only be used responsibly.
Bad Press
The bad press over payday loans has been prompted by some unfortunate cases of unethical dealings. Whilst the majority of payday loan providers will act responsibly there have been some instances where this has not been the case. All companies who offer financial products, such as payday or fast cash loans, should have a valid credit licence. Any company which does not have this is unlikely to be a reputable loan provider and individuals should therefore cease any dealings with them. Another issue which has been raised is over the storage of personal data.
Payday loans will require certain data before they can approve or provide you with a loan but this should be stored securely. It is therefore important that anyone considering applying for a payday loan researches the data protection procedures which are in place with different providers.
Good Press
Of course, it is not all doom and gloom in the payday loan world and there are plenty of positives for this form of money lending. Payday loans are quick and easy to apply for and, when used on a short term basis, can help people to manage unexpected expenses.
A common misconception over payday loans is that they charge an astronomical amount of interest or APR. However, this is not the case and the interest is usually found to be much more reasonable over the short term. The misconception over APR arises from the fact that the figure quoted is for the annual amount of interest that will be accrued. However, as payday loans are only intended for short term use, this figure is not truly representative of the amount of interest which will be credit.
In reality, payday loans often incur a figure of around £20 of interest per £80 of loan. This means that an £80 loan will require a repayment of £100 – the original value of the loan plus the £20 interest charge.
Other positives for payday loans include the fact that they can be applied for and approved in minutes, with the cash being sent in as little as one hour. These 1 hour loans mean that applicants can have almost instantaneous access to vital funds which, if used responsibly, can offer them a number of great benefits.
|
