There’s two schools of thought about payday advance lending – either it’s a brilliant way to get cash in a hurry or payday lenders are worse than Hitler – so which is it, are they good or bad?

Payday loans in and of themselves aren’t necessarily good or bad, as they’re much like any other type of lending: when used responsibly, they can be a help, but if a borrower doesn’t consider all the repayment terms, they can get themselves into trouble. This means that there are no good or bad loans, just uneducated borrowers.

Not as terrible as you think

If you talk to any payday loan provider, you’ll hear plenty of reasons why taking out short term loans with them is the best idea since sliced bread, considering how easy and effortless it is to get the cash you need in as quickly as a few hours. In all honesty, this is a big plus when it comes to access to emergency cash.

You often don’t have the luxury of time when it comes to a dire need for money; when you’ve got a serious need for instant cash loans to take care of an immediate and urgent need to take care of an unexpected bill, you can’t really go wrong. However, you need to remember one very important thing when it comes to payday lending: just because you don’t have to pay a penny until a month has gone by, it doesn’t mean that there’s no price to pay.

The other side of the coin

The price of such easy access to cash up front, especially when most lenders don’t even require you to pass even the most rudimentary of credit checks, can be a nasty wake-up call for unprepared borrowers. It costs anywhere from £20 to £30 in interest for every £100 borrowed from a payday lender, which means that repaying a £500 loan costs you anywhere from £600 to £650 – which is fine if you can afford it, but not so good if you can’t.

Once you miss your repayment, that friendly payday lender that bent over backwards to make sure you got your cash so quickly often metamorphoses into a rather grisly monster.  The gloves come off, the claws come out, and before you realise it you’ve been slapped with late fees that will make your head spin – and some lenders will ‘roll over’ your loan for another month, which means you’ve gotten another month to repay – at double the original interest.

These punitive late fees and interest rates are a payday lender’s way of managing their risk when it comes to agreeing to more or less give out cash to anyone who comes a-knocking. The high penalties are supposed to act as a deterrent to anyone who can’t afford to repay the loan, but many lenders do not draw enough attention to these fees when courting new customers, which has contributed to a large number of borrowers ending up in an ever-widening spiral of unmanageable debt as a result – so you need to watch yourself very carefully and make sure you don’t take out any payday lending unless you’re absolutely 100 per cent sure you’ll be able to repay the loan without incident!