An overview of payday lending industry in the uk

Since the time of the great economic melt down there has been unrest since the common man has been facing great financial problems in his day to day life. Payday lenders and their business of payday lending, which had once occupied the back seat is now flourishing in the United Kingdom, making it a huge business today. Simply put, the number of people who applied for a payday loan before the economic crisis was three folds lesser compared to the present day’s application figures. A lot of people prefer borrowing from an online payday lender for short term emergencies rather than choosing traditional methods. One major reason is that traditional methods are time consuming and never offer help on time.

Even though financial experts term the payday lending business as a social evil that draws its borrowers into the whirlpool of debts, the number of individuals who choose to apply for a payday loan is constantly on the rise. With such a demand for short term loans the payday lending industry has grown significantly in the recent years. Numerous payday lenders flock the online space these days to grab their share of customers. And generally, the loans that are offered by them are short term in nature and the size of the loan amount could vary from £100-£1,000.

A person who borrows a loan amount of £100 would on an average end up paying an interest amount of £25 per month. Since they work from paycheck to paycheck the borrowed money is bound to be repaid in a month or two. There can be no questions that they are expensive, however payday loans are cheaper than an unauthorised overdraft fee, a cheque bounce or a direct debit charge. These short term loans help pay off a sudden unexpected monthly expense that may crop-up, be it a utility bill or a car breakdown.

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Even though high interest rates are a matter of concern for many, it is the simple approach and easy access that gets the payday lending business going. Another vital reason that can be attributed to the success of the payday lending business is the convenience of borrowing instantaneous. Apart from these factors, a payday loan is processed for people with bad credit and it is also easy to have the funds transferred to the bank account on the same day. By far, a payday loan helps tackle sudden financial crisis and manage short term credit flows without any hassle.

Those who use the payday loan service as a temporary back-up at desperate times and repay the same in a month or two actually have positive reviews to share. But for those who make it a habit to extend or roll over find it difficult to get out of their financial crisis. Payday loans are temporary stop gaps and are not a permanent solution to your financial crisis. People who have multiple loans from different online loan lenders to be repaid eventually fall prey to the vicious debt cycles, since borrowing a payday loan to repay another is never a wise move.

And the questions to ask yourself before taking a payday loan are, how much to borrow, how to repay and how much is charged. Have the right answers in hand before you choose to borrow from a payday lender, and you’ll see that when borrowed rightly payday loans can be a boon!