Financial Relief

In the UK, payday loans are becoming one of the most popular financial products on the market. This is because as banks tighten their belts in terms of who they lend money to, consumers are seeking alternative sources of financial aid, like payday loans. Payday loans are unsecured short term loans that are best used to cover you in emergency situations such as an unexpected bill or you need to pay for urgent home or car repairs. Most people are eligible for a payday loan, including those with bad credit. Before you consider a payday loan you need to make sure you know the facts and you may wish to seek independent financial advice before applying.

Bad Press

There is much discussion about the payday loan lending industry and recent payday loans have received a lot of bad publicity because lenders have been blamed for escalating people’s debt problems. The interest rates are very high on payday loans compared to other loans and the charges will simply mount up if you cannot repay the loan. If you are already in debt then you risk falling into further debt because charges mount up if the borrower fails to meet the terms of the loan agreement.

Find the Best Rates

Everyone should be able to get fast cash when they really need it but payday loans are never the answer to any long term financial problems you might be having. With household finances under pressure, it is not surprise that there has been an increase in demand for payday loans. The best way to find the right payday loan is to take you time and research the different companies, looking at the terms and conditions of each loan as well as the interest rates.

There is no doubt that payday loans take advantage of those who are most in need. Unless you were seriously desperate why would anyone take out a loan with a 15,000% interest rate? Sadly in the UK when the banks aren’t lending to people we offer no alternative to those most in need other these expensive payday loan companies.

However, with all of the scrutiny regarding payday lenders there are a few companies in the industry who are cleaning up their act and trying to make borrowing more affordable. One company charges 50p interest per day on any loan of up to £300. This seems like a fair deal. None the less with the stigma attached to payday lenders it will be very difficult for any loan company to make their service seem completely credible no matter how hard they try.

There should be more regulation regarding the lending industry in the UK. It is no surprise that British people have higher levels of personal debt in comparison to their western European counter parts because we have a government which seems to actively encourage borrowing. In Ireland for example it is illegal to charge over a certain level of interest on a loan.

What the future holds for payday loans is uncertain but for the time being they are going nowhere.

Payday Loans are not necessarily the right answer even if you have a high level of debt and can’t find money elsewhere. Payday loan lenders are designed as small short term loans to tide people over in an emergency. Frankly if you have any level of debt which you know is not going to go away then it is probably best to stay away from payday loans as they can easily make the situation worse rather than better.

The problem with Payday loans is the high rate of interest. If you are borrowing £100 for one week and paying back £125 then repaying the loan won’t be so bad. The problem is that many people borrow £1000 and end up having to pay back £1300 and obviously this is more difficult. A high proportion of those borrowing from payday lenders borrow repeatedly. This suggests that once in debt certain people have trouble breaking free from an already difficult financial situation. This is another good reason not to get a payday loan as once you are in debt it can be very difficult to get out.

If there is no alternative to a payday loan then make sure you shop around as all of the lenders are in competition with each other and some will be cheaper than others. Work out exactly how much you want to borrow and how much it will cost you to pay back the loan. Be honest with yourself as to whether you are just appeasing your finances and making things worse.

Payday loans are more popular than ever in the UK and this in itself is a worrying as it reflects on the amount of people who are not able to borrow from more common lending companies such as banks. Everyday articles are written and statements are made condemning payday lenders but are they not simply providing a service which is necessary due to the harsh nature of the current climate. The banks will not lend to people with bad credit, so what alternative do people who are desperate have?

The government might suggest that credit unions are a good place to start but in reality they cannot lend money as fast as a payday lender and these loans are usually taken out in emergency situations. If payday loans are band then we are going to see people going to unauthorised loan sharks who can lend at any rate they chose and use means for recovering their money which may not be legal.

Payday loans should be allowed to continue but there ought to be more regulation in this area. Rates of interest should be capped. Not at a level where the lenders cannot make a profit but at a level where borrowers are not going to end up stuck in a spiral of debt.

As the current financial climate seems unlikely to improve in any dramatic sense for at least another year it also seems likely that the number of people with poor credit ratings are also likely to increase.  While people are trying to decrease their personal debts, the UK still has the highest level of personal debt in Europe. It is true that the use of credit cards is far lower now than this time last year but it also must be accounted for that less people are eligible for credit cards in comparison to a few years ago. In fact, less people are eligible to borrow from credit card companies and banks that they were in 2006 for example.

The lack of lending from the banks and other mainstream sources has led to a rise in loans for people with bad credit which often comes in the form of a payday loan and bad credit loans. These are short term loans for people with high interest rates which can be obtained no matter what your credit rating. Their increasing popularity is a concern for many who believe that payday lenders charge extortionate amounts of interest to those who can least afford it.

However, it is also argued that if banks will not lend and payday loans are not an option then unregulated private loan sharks will become the next alternative. It is likely that over the next few years Payday loans as they become more regulated will also become more mainstream and this will lead to a safer, more transparent market place for the consumer. 3 month payday loans will become a lot more common place.

Payday loan companies are coming under more and more scrutiny and this for the most part should be considered a good thing. There are far too many hidden charges and extortionate rates which consumers can be naive of.  However, the theory behind a payday loans is in itself not a bad thing. For people who have bad credit and need a bad credit loan a payday loan means that they can avoid going to loan sharks on the street who are totally unregulated and can provide any terms they like.

However, the problems arise when the consumer feels they are being taken advantage of by payday loans lenders or brokers they cannot pay back. These days the rate of interest and how much a borrower needs to pay back should be very clear. It is also clear that if a borrower cannot pay a loan back on time extra fees will be incurred. In this way the borrower must take responsibility for their actions and if there is any doubt as to whether a loan can be paid back it should not be taken. However, it is also up to the lender or broker to make the rules as clear as possible and if loans are defaulted on, borrowers should not be encouraged to take out other loans.

The extra regulation regarding payday loans should be to emphasise clarity. The consumer should be encouraged to shop around and find the deal which is best for them.  Bad credit loans should not be taken instantly and time should be taken to work out exactly how much a consumer might need to borrow, how long for and how much they will have to pay back on the allotted deadline. If these considerations are taken then there would be fewer issues for borrowers and lenders alike.

Payday Loans are now an international business which is growing considerably every year. While they remain most popular in the UK and the US they are also common in Canada and Australia. In the USA payday lending is now a $7 billion a year industry and in the UK it is certainly worth over £100 million a year.

These figures are concerning for many who believe that lending at such high interest to those who often have the smallest income is immoral and irresponsible. However, the problem is that in this sup prime era payday lenders are often the only companies who will lend to people with Bad Credit. If people with emergency cash needs cannot go to official payday lenders then this may lead people to private loan sharks which many would argue is far more compromising.

The growth of the online payday loan market over the last few years has been unprecedented. However, this has also led to an increase in the number of Payday loan brokers some of whom charge fees for finding a lender who can lend to even the most ineligible of clients. There have been many complaints both in the US and the UK that both lenders but more often brokers carry hidden fees which borrowers were not aware of before accepting a loan or loan service. Many payday lenders and brokers have retorted that their terms and conditions are included on their websites like with any other loan company but many people fail to read them before accepting a loan.

There is mounting pressure on both sides of the Atlantic to make payday loans more transparent and to prevent people being stung by hidden fees. However, interest rates are likely to remain high because the lenders are taking a high risk by lending to people with bad credit.

Some time has passed since the United Kingdom recovered from the downturn. Today, the economy is coping with the aftermath, and the country’s new leader is trying to do this by introducing severe austerity measures. These include slashes to public funds and tax increases. But is the country improving at coping with money?

According to recent surveys, regular British consumers are getting better at repaying their old payday loans debts, but may not signify that they aren’t pulling in more debts. Saving has become more popular, so it goes to show there is evidence which proves that people are more wary about the level of money they spend. Yet a survey could simply attest to a general average for the whole country. Actually, personal debt is still very high and there are masses of individuals who experience a daily struggle with money.

On a regular basis, there are new warnings about dodgy loan providers like loan sharks, which sell criminal loans to consumers who are really short of cash. Loan sharks are not offially registered as lenders, and usually demand extortionate rates, which the victim will never be able to pay off. When the victim ends in trouble with the loan, the loan shark will either provide more cash at even more extreme interest rates or introduce threatening or violent behaviour to dictate settlement.

At no time is it worthwhile using a loan shark as the situation is likely to end in tears. However what about other independent loans available nowadays? What exactly is available and which loans are worth the while?

There are masses of worthy loan products on the British loan market these days. These include payday loans or wage day loans, logbook loans, guarantor loans and other types of specialist loans. They are not usually offered by traditional lenders but are often found on the internet or in TV commercials.

Payday loans are available to people who do not represent the ideal borrower, or who could have been turned away for a credit product from a traditional bank.

So even if an individual has been to court for bankruptcy or doen’t earn an income, they will in most cases be accepted by payday loans no credit check lenders. Due to the fact that the borrower carries a larger risk factor to the payday loan lender, the rates on payday loans are generally a bit more steep compared with other loans. This is due to the fact that the borrower is more likely to find it difficult to settle the loan, based on their past experiences with lending products. By bringing in a slightly larger borrowing rate, the loan provider is managing the additional risk level. Yet, payday lenders are (for the most part) completely legitimate loan providers and won’t employ any of the tactics utilized by loan sharks. To be sure, it is good news to an individual who is short of cash, that they could take a loan of up to 500 pounds and get the cash quickly. Yet if they are already in a lot of debt, then it may be unwise to borrow more money.

The World Bank has warned that following on from the European debt crisis a global recession is becoming more and more likely. The bank stated that the Eurozone is already in recession, though whether or not the Eurozone ever really came out of recession is a matter for debate. However, they also went on to state that the Eurozone is likely to contract by around 0.3% this year which create a domino effect for other countries around the world.

The IMF is also expected to release a bleak review suggesting that even the economies of the fast growing BRIC nations have slowed down over 2011. Andrew Burns the manager of global macroeconomics at the World Bank has stated that,

“Developed and developing country growth rates could fall by as much or more than 2008 – 2009”.

In short it appears that we should be bracing ourselves for another global economic recession which is likely to be worse than the last one. While some measures such as interest rates cuts and quantitative easing were taken to solve the economic crisis in 2008 and 2009 the correct procedure in the event of another international down turn is as yet unknown. However, it is clear that even if the new BRIC economies are affected it is likely that the established economies of Europe and the USA will be taking the biggest hit.