While sometimes you may feel like you need to do whatever it takes to keep your household running properly if you’ve run into financial problems due to the rather poorly performing economy, you should draw the line at making a deal with the devil. Let there be no doubt in your mind: whatever your experiences may be with traditional lenders, payday advance lenders can be much, much worse – and should be avoided like the plague if you can help it.
NEARLY CRIMINAL INTEREST RATES
Payday loan providers are currently not obligated by law to limit the interest rate they charge on their short term loans, unlike traditional lenders like a credit union who face a 2 per cent monthly interest rate on any lending they make to their members. Instead, most payday lenders will charge as much as they can get away with, and some lenders such as industry leader Wonga have the bald-faced audacity to charge more than 4,200 per cent in annualised interest on their loans, which can make the repayment of such a loan terribly expensive.
On top of the costs inherent in a payday loan of just one month, many payday loan providers play a bit fast and loose with the rules when it comes with making sure their customers have the information they need before agreeing to take out cash. Transparency has been a serious issue with payday lenders to the point where debt campaigners such as Labour MP Stella Creasy have made it their primary goal to reform the short term lending industry by not just instituting an interest rate cap but by ensuring that lenders are required to explain the costs of taking out payday loans much more clearly to customers.
HELLHOUND ON YOUR TRAIL
It may be all smiles when you take out a payday loan, but if you neglect to repay the loan in full and on time, you’re going to see the bad side of your payday lender – and in a hurry. A large proportion of borrowers have been hounded by debt collectors working for what was up until a few days ago a quite friendly and accommodating payday lender, and there have been many tales of borrowers being pursued so incessantly that the experience has been described as having the hounds of Hell nipping at your heels.
Not only that, but it’s nearly impossible to clear a payday loan debt if it’s gone past the repayment deadline. This is because lenders will levy such weighty late fees and will compound your monthly interest by so much that a relatively inexpensive loan for a few hundred pounds can end up costing thousands to repay completely – so do yourself a favour and steer clear of these silver-tongued devils.
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