We have all heard of payday loans, and certainly as someone who has struggled with finances in the past, they have been an idea I have entertained. Yet I have worried about the repayments and some of the press and had concerns.
Hence why I wanted to explore more into the topic and see – are Payday loans, a good or a bad thing?#
How they work
The Vivus website explains the concept well, payday loans are all about helping someone manage a short term financial need. The loan provider will lend you a small amount of money which needs to be repaid when you get paid.
It is a high cost short term credit agreement, which Vivus is keen to highlight, it shouldn’t be used for long term borrowing over a long period.
Difference between a short and long term loan
Payday loans are very different to long term loans that we take out on our house or car. It is only sutiable for a short term. In stories where people have used them successfully it has been because they have had outstanding bills which should payment not be met the fees would be higher than interest on the loan.
You should always know that you have the funds coming in order to meet the terms of the loan.
The bad press seems to originate from third party lenders and in situations where people have taken desperate action knowing that they would struggle to make the actual repayment.
You need to make your own decision and read the terms carefully, again Vivus do a great guide so you can go into the agreement with your eyes wide open.
Have you ever taken a payday loan? How was the experience for you?