Exploring your options before taking out a payday loan

The payday loan industry is an industry that's rarely out of the media, and unfortunately 9 times out of 10 it's not for the right reasons.

To be honest with lenders charging interest rates of over 1000 present it's hardly surprising.

You'll have heard the stories about borrowers falling into debt with these companies and some even class them as "legal loan sharks", many people avoid payday loans but some people they feel like they have no choice when they are faced with a difficult cash emergency.

For those who feel like they don't have a choice, we'd firstly like to let you know that you do. If you take a look at this list of alternatives you'll see that you have various options, some which don't even mean borrowing money at all.

Financial difficulties can be stressful and can send you into a bit of a panic but don't be blindfolded by it and think your only option is a payday loan.

Firstly see if you can get any extra hours at work or maybe look into selling some of your old or unwanted items. If those don't work for you have a look into your other options such as using a credit card or seeing about getting an authorised overdraft on your bank account.

Another thing to mention is that you shouldn't be ashamed if you've fell short of cash, we've all been there and done it at some point in our lives so don't feel like you couldn't go to your family or friends for help, they'd most likely be very understanding and more than happy to help.

If you do decide to go down the route of a payday loan then it's really important that you put prior planning in before applying. Calculate your finances and make absolutely certain you will be able to afford to repay the loan along with any interest when it becomes due.

Not only that, but make sure you'll be able to make it through the following month after using part of your wages to repay the loan. The more you borrow the more money you'll repay in interest so it's also vital you only take out the amount you really need.

One of the reasons many borrowers fall into debt is because they try and manage several payday loans at the same time, whereas payday loans are an expensive means of borrowing and you should only ever have 1 at any point in time as an absolute maximum.

You're probably wondering why the lenders don't stop you from taking out another loan if they can see that you have a loan with another company, and rightly so they should.

However at this moment in time lenders don't have access to real time data so they're unable to get a proper picture of the borrowers finances when they apply since credit reference agencies tend to only update their records once a month.

There's calls to bring real time data to the industry which would be a really good idea and would certainly reduce the number of borrowers falling into difficulty.

Hopefully throughout 2014 we do see real time being introduced as the FCA takeover from the OFT in regulating the industry. They are already planning on introducing a cap on the amount of times a loan can be rolled over which is certainly a step in the right direction.



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