First of all it has been a little while since I last wrote a post on this blog. Luckily my new writer Hayley has been doing a great job of providing us all with interesting things to read and keeping this blog ticking over during my absence. You can see all of Hayley’s posts here by the way.
Now it is time for me to write about something and with Payday Loan debt on the rise, I thought it was only natural to write another article on the subject.
I have recently had a baby and I didn’t realise just how much time they need, although it is totally worth it. That’s why I have not posted anything here for the last few weeks. Baby is doing fine and things are going well. Now he is here I am even more determined to get out of debt, even though I was pretty determined before, I see an even stronger reason to sort things out.
Now things are starting to get into more of a routine, I should be able to start blogging again. It will be more difficult than I thought but it will be doable. So if I am quiet then you now know why. There will always be a post on a Friday from Hayley so all is not lost.
With that out of the way, today I am writing about Payday Loans. I got the idea for this article some weeks ago, and when I thought about it, it seemed like a good thing to write about. So here I am, fingers on keyboard ready to offload my thoughts on Payday Loans. Some of these thoughts may surprise you, but heck we all have our own opinions and so in a way, this article is the inner thoughts from Rob about payday loans.
Payday Loans surely nothing good can be said?
Well as much as it kills me to say this yes they do some good for a select bunch of us. I agree that the headline interest rates appear shocking, and the types of people who tend to use this type of loan are more vulnerable but, and it’s a big one, they are one of only a few lenders willing to lend to this particular section of society.
There are of course credit unions but in their current state, they just aren’t as accessible as perhaps we would like them to be. So that leaves loans sharks, unregulated and dangerous or these lenders, regulated and a safer option.
Once upon a time I used payday loans and at first I was sensible. Faced with a potential £75 of bank charges or a £25 charge to borrow £100 for a month I chose the latter. It was only when I started to act irresponsibly with payday loans that I got into trouble. They saved my bacon a few times and so that’s why I see them as a good solution, but only if you can pay them back the next month.
They were also cheaper than borrowing on my so called Reserve with Barclays Bank. The Barclays Reserve fee cost £30 per week, and my reserve was a mere £100. That’s very expensive and more surprisingly, a hell of a lot more expensive than borrowing from the likes of Wonga. I am not sure if Barclays still have this so called reserve facility, hopefully not at those prices (which was back in 2008).
So to sum it up, I think Payday Loans are good, if you are the right type of person and can pay back comfortably when due. Everyone else should avoid at all costs.
The Bad, the bit you are waiting for
Well the bad part comes in many forms. From payday lenders not performing proper checks on people who have no hope of repaying their loans to someone like me who is just plain irresponsible. The fact is that these loans are short term and that’s it. If you are borrowing a large amount then you simply must be able to pay it back the next month. If you can’t then don’t borrow the money because doing so will put you in a whole heap of trouble. Trust me I know this from experience.
When you are struggling with repaying a payday loan you may think borrowing from another provider will help, it certainly won’t. All you are doing is making things worse and you could even end up owing money to several payday loan lenders. When you are in that situation you are pretty much stuck, unless you can pull the money from thin air.
The option to roll over or defer your loan is tempting, but can keep you in debt for longer and makes the money you borrow even more expensive. There are talks of limiting the number of roll overs in the UK to 2 but some of the lenders are not happy about this. I personally think that much better checks of prospective borrowers needs to be done to limit the number of us getting into trouble.
If you are financially struggling, a payday loan is a very bad choice. Just don’t do it because all you will do is to make things worse.
Well when you get to the ugly stage of payday loans, I am talking of course about all the things that happen when you can’t repay what you owe. It starts with constant telephone calls chasing payment, letters and you are normally also charged additional fees and interest. Things turn ugly pretty fast and at that point you should look towards getting help with your debts.
After some time it is likely your payday loan debt will either be sold to or transferred to a debt collection agency. The phone calls and letters start again and you may feel pressured into paying off more than you can afford.
My advice, unless you know 100% you can pay your loan back the next month then don’t go anywhere near payday loans.
Payday Loan Survival
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Your thoughts on Payday Loans?
What do you think about Payday Loans? Have you ever used one? Do you think they have a place in society? Please share your thoughts in the comments area below.