Payday Loans - Good Or Bad - What’s The Solution?

Payday loans are very short term loans that are designed to provide a solution to a short term cash flow issues, such as being caught out with an emergency just days before payday when the bank account is pretty much cleaned out. There are pros and cons to payday loans, and although these loans often get bad press, they are useful in some circumstances. However, it is important to remember that the APR on these loans is very high, and although it may seem as though you are not paying much if you only take out a payday loan for one month and then repay it, many people get stuck in a rut whereby they roll over the loan from one month to the next, and incur hefty fees each month, and is similar to the high costs involved in using a service such as a pawn broker.

If you have a genuine emergency and you are short of cash, but you are confident that you can repay the money once your salary comes in, then a payday loan can prove to be an effective solution. The amount that you can borrow is usually relative small for a loan - often between £50 and £1,000. You will usually need to repay the money within 28 days, and in order to take out the loan you need to provide proof of ID and income as specified by the lender. However, there are usually no credit checks carried out with this type of loan.

If you are struggling with your finances, however, and you take out a payday loan, which you then proceed to roll over every month because you are always short of money then you need to consider other options. The chances are that you are paying off other expensive debts, such as credit cards and store cards, and this is why you find yourself short of cash each month. However, rolling over such a high APR loan will quickly put you in an even worse situation.

One effective option if you own your own home and find yourself rolling over your payday loan month after month is to take out a homeowner loan, even if it is for a relatively small amount. 

This will give you a long term solution, and it will be a real solution to sorting out your finances rather than living hand to mouth so to speak, and struggling with lots of high repayments each month. This way you can pay off your payday loan once and for all thus avoiding the hefty monthly fees charges, and you can also consolidate other expensive credit such as store cards and credit cards. This should put you in a better financial position, leaving you with more monthly disposable income, and eliminating the need to continue taking out payday loans. 

It must be remembered though, that not every one is eligible or will be accepted for a loan, and in these circumstances, the payday loan shops offer an invaluable service which helps prevent people getting caught up with loan sharks lending them money because no high street lender will. 

People are advised to always go to there local citizen advice bureau if they find themselves getting in to very serious financial difficulties, and perhaps are considering or using frequently, payday loans, or even loan sharks,  and need help and advice on finding the best way out or their circumstances.



