Far from being a cause of financial stress, payday loans can lead instead to financial relief.  That is, providing they are taken out responsibly, but that is true of any loan.  In fact at Payday Loans UK there is a better safeguard in place to ensure you can pay the loan back.  Instead of looking at your past performances of paying back loans, we look for your ability to pay back a loan now.  It is such a short term loan that we only require that you have a job paying above a certain amount, and that you get are paid monthly.  If these requirements are met then we know you have the capacity to pay the loan back.

Payday loans are taken out for similar reasons that mortgages are taken out on homes

There are many situations in which you might need money quickly, and not be able to wait until you are next paid.  This could be anything from an unexpected bill, to repairs needing to be done to your car or house, running out of money on holiday or any number of other things.  Whatever you need the money for, as long as you meet the requirements for the loan, you will receive it on the day you apply.  The money will be transferred to your account, so whether it is cash you need or money in your bank to pay a bill it will be there when you need it.

Payday loans are about the cheapest option for this sort of short term, emergency financial relief.  To arrange an overdraft with a bank would take too long and unarranged overdrafts can be extremely expensive, with daily as well as monthly fees.  They can end up costing over twice as much as a payday loan.

Economic times are difficult at the moment, and this is probably why the popularity of payday loans has quadrupled.  It is no surprise that people on low income are the ones that take advantage of payday loans most often.  The lower your income, the less you can afford to save every month, so the fewer options you have when emergency situations come along.  It is always better to rely on saving than to take out any sort of loan.  After all, a loan is only taken out when savings are not sufficient to pay an expense.  Taking the example of buying a house, for instance, the reason people take out a mortgage is the same reason people tend to take out a payday loan, on very different scales of course.

Houses are very expensive so few people have the savings to buy one outright.  Similarly, with a payday loan, there is also usually an expense which needs to be paid but you don’t have the money right now.  Just as with a payday loan, when buying a house it is unreasonable to simply save up, or in other words wait until you have actually earned all the money to buy the house.  By that time you will probably be almost ready to retire, and when are you supposed to live until then?  You need somewhere to live, but you can’t afford it right now so you take out a loan from the bank.  With a payday loan it is usually a similar situation on a smaller scale.  You need something urgently, you can’t pay for it right now so you take out a loan.  Instead of taking decades to pay it back though, you repay it the next time you are paid.  There is nothing wrong with this, and in fact payday loans are usually a better bet because of the shorter time scale over which they operate.

Although payday loans and mortgages can be compared in this way, it is actually unfair to use the same interest rate device to compare their expense, namely APR.  This is explained more fully in previous posts and in other places on this site.  Suffice it to say, payday loans are one of the cheapest options for short term emergency loans.

Tags: emergency cash, mortgages, Payday Loans, Payday Loans UK, short term loan, unauthorised overdraft

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Ken Heading keeps up to date with all the financial news in the UK, particularly as it affects payday loans, and enjoys writing on this subject.

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