If you put 'payday loans' into
Google, as well as getting lenders you will see news articles and maybe even a
blog or website entry that is heavily critical of these types of loans. But if
you also look at the websites of many of the payday loan providers themselves
then you will see that most of them have statements on how they will act
responsibly when considering applications.
A lot of criticism that is levelled
at payday loans relates to the very high APR that legally has to be displayed.
Some of these APR figures look truly frightening; over 2000% is not uncommon.
But the problem with these numbers is that they completely fail to give a true
picture of what you would actually pay for borrowing money this way.
Compare a typical £500 pay day loan
with the same amount borrowed with a personal unsecured loan. Typical unsecured
loan APR rates look much lower than the pay day loan rate, but when you
consider that the pay day loan will cost around £125 to borrow - making a total
of £625 to be repaid - and the personal loan over a minimum six month term
would cost a total of £721* then the comparison doesn't start to look so bad.
Using a credit card to buy something
for £500 is obviously going to work out cheaper so long as you can pay it off
fairly quickly, but if you need cash in your bank account then the fees
associated with using these can work out to be fairly expensive. The great thing
about payday loans is that they can help to instill discipline in your
finances. Research has shown that most people do not tend to pay off their
credit cards bills in full every month even if it is a manageable amount. Debts
like these can easily mount up, eventually becoming absorbed into a debt
consolidation loan. The effect is that this debt never actually goes away it
simply gets moved from one place to another within a person's personal
finances.
Because a payday loan is required to
be repaid in full on the required date this means that a customer is not
getting themselves into further difficulties. The debt is paid off, not
mounting up the interest somewhere.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น