While detractors and critics of no credit check loans say they can do more harm than good, the truth is that short term loans for bad credit can solve short-term financial problems that could otherwise lead to severe issues for UK households.
Traditional lenders have taken issue with short term loans due to their high APR interest rates, stating that they can result in serious financial distress if a borrower misses a repayment. However, a large number of Brits who find themselves in need of such a loan are already in financial distress, due to a combination of constant increases in the cost of living and pay cuts or jobs losses, making it harder and harder for the average British household to make ends meet.
Payday loans do indeed have high APRs because they do not require credit checks of their applicants to take out, but that’s simply not the whole truth. The APR, which stands for Annual Percentage Rate, is a measure of how much interest a borrower pays on a loan over a period of 12 months, yet short term loans are almost always for short periods of time, with the typical loan have a term of only 30 days, with the typical fee for a 30 day loan being the rough equivalent of using an unauthorised overdraft.
Many industry experts believe that traditional lenders have tried to stigmatise the providers of short term loans as ‘legal loan sharks,’ portraying them as evil companies preying on the financially downtrodden. However, it could be said that Brits in a financial bind have no other choice, as these same traditional lenders who decry short term loans have ruined the economy, making it harder to make a living, and resulting in Brits developing poor credit scores which then precludes them from being accepted for a traditional loan – yet High Street calls payday lenders the villains, even though it may indeed be the other way around.