In this current day and age of sluggish economic recovery and higher prices for essentials such as food and petrol, every last penny counts when it comes to meeting your expenses and making ends meet. Unfortunately this means that most of us have little left over at the end of the month to put towards savings or – heaven forbid – use to cope with a financial emergency, so in the event that you need to pay for an unforeseen cost you need to know that not every payday lender is created equal.
Bigger is not necessarily better
There are a number of payday advance lenders operating within the UK currently, and the list grows longer every day that the economic recovery ploughs ahead so sluggishly. However, just because there’s one or two big payday loan providers dominating the industry while the rest of the market is made up of a myriad of smaller lenders doesn’t mean that the large-scale lender is your best choice.
It’s common knowledge that no credit check payday loans carry incredibly high interest rates, as annualised interest on even the most affordable short term loans is usually around 1,000 per cent APR. However, larger lenders have a strange tendency to charge worse rates than smaller rivals, as these small-scale competitors have to differentiate themselves somehow and often do so by providing unsecured credit at a more attractive rate.
How much is too much?
One of the largest payday lenders in the UK, QuickQuid, does offers a relatively low APR of 819.12 per cent on some of their lending, but only for low risk borrowers with a proven track record of repaying their debts and who have clean credit histories. However, for anyone with poor credit or considered a ‘bad risk’ by the lender, rates skyrocket to 2222.46 per cent – a massive increase indeed.
Of course, even QuickQuid’s worst rates are head-and-shoulders above some other offerings by even larger firms. In fact, industry leader Wonga charges an eye-watering 4,214 per cent APR on their payday loans, which can lead to almost guaranteed crippling debt in the event that a borrower misses his or her repayment deadline.
There are so many payday lenders that can offer much more affordable rates, yet for the most part the large advertising and marketing budgets of high-profile lenders such as QuickQuid and Wonga can certainly drown out the meagre efforts of their smaller, less powerful competitors. Despite this, these firms do indeed have more affordable rates than their rivals, making it of the utmost importance for anyone looking for an emergency loan to leave no stone unturned in their search for affordable unsecured credit.
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