5 Dont’s When Applying For A Payday Loan

Cash till payday loans have become a popular source of short term finance in the UK ever since they were first introduced in 2006.  The concept of payday loans is that they are a short term loan of between £50 and £1000 which can be borrowed for between 15 and 31 days.  The repayment of the loan plus the APR or fixed rate for one month should be made on the borrowers next payday as this is when they will have enough money in their bank account at any one time to make the full repayment.  It is only when payday loan users postpone the loan repayments that they start to incur high rates of interest and the loan ultimately becomes difficult to repay.  Therefore to avoid this dangerous situation, let’s look at five ‘don’ts’ when using payday loans.

Borrow money for anything other than emergencies

Cash till payday loans are not the cheapest way to borrow money because of their high rates of APR, therefore only ever use these loans for emergencies where you have no other borrowing option.

Give false information to try and obtain a payday loan

Giving false information to obtain a payday loan is ultimately only cheating yourself.  If you have to give false information it probably means that you do not qualify for a payday loan, therefore you should not be requesting one.  Look for alternative sources of finance.

Rollover the loan

You are legally permitted to ‘rollover’ (postpone repayment) a payday loan as many times as you wish.  As tempting as this may be, every time you do this you will incur another months APR which when you consider that the most competitive rate of APR is 1737%, will lead to a huge repayment amount.  Therefore make sure that you make the full repayment including the rate of interest on time and in full.

Borrow a payday loan to repay another payday loan

Shockingly a massive one in four payday loan borrowers borrow one payday loan to repay another.  This is absolutely false economy and will lead to very severe financial implications.  If you feel that you have no other choice because you cannot afford to repay the payday loan then it is essential that you contact an impartial debt management service like CCCS as soon as possible to get impartial advice on how to repay your debt sensibly.

Select a substandard payday lender

There are thousands of payday lenders in the market therefore make sure that you select a reputable lender who has good customer reviews and the most competitive rates of APR.  If you are unsure then visit an impartial comparison website like moneysavingexpert.com.