The Advantages And Disadvantages Of Payday Loans
Governor of the Bank of England Sir Mervyn King has claimed that short term loans could be the answer for Britain’s banks. With the current Euro crisis in mind, King said that lower-cost sources may be able to help prevent further losses for the banks.
King claimed that some banks thought nothing could go wrong before the crisis but, when it did, they relied on taxpayers’ money to survive. If short term loans are potentially the saviour for Britain’s banks, should the same logic be applied to individuals who face their own financial crisis? In short, there are both advantages and disadvantages to taking up what are commonly known as payday loans.
The main attraction to this type of funding is that they are quick, easy and relatively straight-forward. An online application can completed in a matter of minutes and the money can be transferred into your account by the lender in less than 24 hours.
Typically, you are able to lend anywhere from £100 to £750 with companies happy to let those with a bad credit history make a claim. Lenders only require some basic information about you, including your job title and level of income. The loan is taken up by those who need a quick cash fix – often to pay a bill or other household cost – before their next payday.
The downfall to this short term loan is that repayment is usually required within a month of the transaction and the rate of interest can prove fairly steep in comparison to a regular loan from your bank or building society. However, there are of course some healthier alternatives that won’t put more dents into your bank balance!
If you have some items of value that you no longer make any use of it could be worth selling them on to friends or family. On the other hand, you could use an online auctioning web site to sell off your goods. Secondly, if you find yourself in a stable full-time job then it may interest you to ask for a payday advance from your employers. If you are able to explain your position and need for a cash fix they may be able to help you out and present you with your monthly wage packet early than usual. Short term loans may be the answer for Britain’s banks but whether they are equally as suitable for individuals is up for debate.