While it’s tempting to take out short term loans in order to resolve your immediate financial issues, the long term effects of this type of borrowing can often have quite ill effects, financial experts have recently warned.
It can be tempting to just take out a payday loan in the event that you’re short on cash and it’s still a few weeks until your next pay period, and the payday advance industry is capitalising on this sentiment by making it exceedingly easy to take out instant cash loans. Most lenders don’t carry out adequate credit checks and boast that they can get you your cash directly deposited into your account the same day you apply – and the majority of lenders don’t even require you to leave the comfort of your flat, as you can apply and be approved right online – but while these types of loans are exceeding easy to take out, clearing the debt that accompanies them is another thing altogether.
Industry experts say that borrowers need to understand how the effects of even one payday loan can linger and cause mischief for months or even years down the line due to high interest rates and late fees. Lenders charge anywhere from 1,000 per cent to 4,000 per cent interest on a payday loan, which means it can be quite costly to repay – and lenders will slap borrowers with massive late fees in the event that the repayment deadline is missed.
You can amass serious amounts of debt if you cannot pay off a payday loan straightaway, experts warn. A relatively small loan of around £500 can quickly balloon to a massive figure if you miss your initial repayment, and with each month that goes by that you neglect to clear your debt completely, this sum will simply keep growing until you could collapse completely under its weight.