Disreputable providers of short term loans have encountered withering fire from watchdog groups recently for using dishonest and misleading tactics, including promoting instant cash loans as an excellent way to raise some extra money for things such as cosmetic surgeries and shopping trips.
Many providers of no credit check short term loans follow responsible lending practices. However, many less scrupulous lenders have been deliberately targeting certain classes of lenders, such those that target women by featuring colourful adverts depicting shopping trips while others tout their loans as excellent for generating the cash needed for cosmetic surgical procedures.
While payday lending has long been accused of nothing better than legal loan sharking, economic experts say that the short term loans provided by payday lenders are invaluable for those who encounter a sudden financial emergency in between pay period. However, since these loans are unsecured, interest rates can be high, as evidenced by APRs upwards of 1,000 per cent, and penalties for missing a payment deadline can be quite high.
However, industry experts point out that since short term loans are designed for the short term – typically a month – using an annualised rate such as an APR will result in massive rates sometimes as high as 4,000 per cent. The true cost of repaying a loan is typically around £10 to £30 per every £100 borrowed, experts insist.
Reputable lenders will make sure that their borrowers are aware of all the risks of taking out short term loans, and will provide them clear and concise information regarding the efficacy of such loans in the short term. However, a growing trend with unscrupulous lenders has been to figuratively widen their net by enticing borrowers to take out loans for more than simply emergencies, encouraging them to use the loans to make frivolous purchases with little thought to the consequences facing them when it comes time to repay the cash.