Payday loans are relatively new financial tools that have become very popular. UK consumers who cannot afford monthly expenses cover the shortfall with this method of short-term financing. Low income and unplanned expenses are two popular reasons for using a payday loan.
If this financing is not repaid during its initial term, it can turn into unmanageable debt due to its high representative APR.
Poor Credit And Payday Loans
Many people are finding it difficult to obtain credit, which makes the no credit check feature of some payday loans very attractive when cash is needed over the short-term. If a payday loan is fully repaid as agreed, it is not very expensive.
However, when the loan is not repaid quickly, serious financial problems can develop. This makes it important to use payday loans only when fast repayment is possible.
The typical payday loan is set up to be repaid by the next payday, with interest included. For example, a 14-day, £200 payday loan may have a £20 interest charge. Based on the convenience of this financing, this charge is not inappropriate.
However, when you convert this figure to representative APR, the result is much higher than the APR for other kinds of credit like conventional loans.
A standard credit card has an APR of approximately 20 percent, while a payday loan APR may be greater than 1,000 percent.
The Cycle Of Using Payday Loans
Many payday loan customers are unable to make repayments because they lack the finances. For someone with no access to additional credit, the only way to repay this loan may be to take another one. Borrowers with several outstanding payday loans may try to consolidate them.
This involves taking a single new payday loan that is large enough to repay the loans currently outstanding. Though short-term relief may be realized, the borrower may be unable to repay the new loan unless the financial status changes. The result can be an outrageous interest charge.
Jubilee Debt Management Helps With Payday Loan Debt
We offer assistance to UK residents with payday loan debt. Let our debt management experts review your income and expenses and recommend an affordable personal budget. This helps you get the most out of your hard-earned money by balancing your budget.
Customers who use a debt management plan to get control of their finances benefit from additional services. We seek to negotiate reduced monthly repayments with unsecured creditors and request that they freeze interest charges. Though a creditor is not required to accept this debt solution, they often respond favourably to fair proposals.
Payday Loan Assistance Benefits
You benefit from using Jubilee Debt Management to help manage your payday loan debt. We aim to present all advice in objective and simple terms. If you elect a debt management plan, we deal with payday lenders directly.
Once you decide on a debt solution, we begin working for you, reducing debt payments to an amount that is affordable and getting you back on solid financial ground.