Payday Loan Debt
Payday loans are something that has long been a topic of debate. Advertised everywhere, people can easily find them online and have money in their accounts with just a few clicks.
Most money experts advise not to take on payday loan debt. Whereas the loan companies are seen to be trying to take as much advantage as they can of those that are vulnerable.
On the other hand, however, when used sensibly, they can be a great way to help you out when you’re left short of money thanks to an emergency.
The dangers of payday loan debt
This type of loan can seem like a great quick fix when you’re strapped for cash and payday is further away than you’d like. However, not keeping on top of your payments will only cause you problems and can to you falling into a vicious cycle.
The main dangers linked with payday loans are:
- Interest rates – Payday loan companies are well known for charging the highest interest rates possible. Not only that but not managing to pay back the loan in the agreed timeframe also leads to penalties and fees being charged.
Luckily, with new laws to control unruly loan companies, these costs have been brought down slightly. Interest rates on these loans have now been capped at 0.8% per day and the borrower will now never pay more than double the amount they borrow.
- Short repayment periods – Although there are some companies who will give you a few months to repay your payday loan, these are usually an exception to the rule. Normally what will happen is that you will need to pay back the loan in full at the end of the month or on your next payday.
It’s often the small print that catches people out when it comes to payday loans, and it isn’t always easy to meet the deadlines you’re given. It often becomes a cycle of needing more loans to pay off the ones you already have, and as touched on above, not keeping up with your payments will lead to being charged a whole bunch of fees and penalties that will only add to your problems.
- Direct access to your bank account – A lot of the time when you apply for a payday loan online, you will be asked to give the company access to your bank account for your payments. What many people discover later, is that the company is taking payments from their account when they aren’t due.
This may be to cover “fees” you didn’t realise were hidden in the small print, but they could also be cash grabs. In some cases, your bank account information may be shared with hundreds of other companies and they may also try to take hidden fees straight from your account for no good reason.
We will always advise to try not to use payday loans as they can cause a lot of damage to your purse strings and your credit score if not dealt with properly.
Thankfully, there are plenty of agencies out there for those who are struggling that are always willing to discuss your options.
Keep in mind, however, if the loan company hasn’t broken any terms of your contract, your chances of getting relief from the loan are slim. As such, the best course of action is to avoid the temptation of payday loan debt altogether.
If you have gotten yourself in over your head with one of these companies and you need help or advice, contact us today. Our friendly advisers are on hand to help work through your debt problems and are trained to give you the best advice for your situation.
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