Payday loans, much like all topics regarding finance and lending, tend to attract all sorts of heated discussions. With people being for, against, or just juggling somewhere in between, you might not know what to believe.
Are there any advantages to payday loans?
Applying for a payday loan is not ideal, for obvious reasons. Nobody really wants to do that. Sometimes, though, even if you are careful with your monthly budget and live within your means, something unexpected happens. With no other alternative, a payday loan is your best solution. Yes, you do have to pay a fairly high interest, but ignoring your financial problem might be far worse.
With the new FCA regulations, most of the loan related platforms still present on the market, such as Loan 2 Payday, will treat you fairly. First of all, you cannot be charged more than 0.8% a day of whatever sum you borrowed. Also, the final amount of money you will have to return cannot surpass an additional 100%, no matter the circumstances.
Regardless of common misconceptions, a payday loan is also cheaper than an overdraft. Whether you chose a broker like Loan 2 Payday or a direct lender, borrowing £100 for a 30 day period will lead to you having to return only £124. Banks charge far more – an additional £70 at Santander, £80 at HSBC, Lloyds or TBS, and £90 at RBS.
What is better – a broker or a direct lender?
If you considered all the pros and cons and have decided that getting a payday loan is the best option, you might still be questioning which way to go – a broker or a direct lender? They are both goods, the only difference being in regard to their business plan. A normal lender will work directly with you and transfer the borrowed sum of the bank account you provided. The process is quite straightforward and requires no third party.
As opposed to lenders, a broker acts as a liaison between them and the client, meaning you. Though this process might seem a bit more difficult, it does have some extra perks attached. A good broker, such as Loan 2 Payday, is the best option for most people with bad credit. This type of service works with a large number of great lenders and will be able to select the perfect one for your situation, making your work easier.
The case of bad lenders
In an ideal world, due to the FCA regulations, loan shark type of firms wouldn’t still exist. However, we do not live in an ideal world and it is best to be careful. If you had the misfortune of getting a payday loan from a certain lender and are now flooded with unexpected extra fees, you can make a formal complaint to the Financial Ombudsman Service. Normally, you could always contact the lender and come to an amicable solution together. However, if this is not an option, the FOS will lead a formal investigation, and depending on your case, you might be even entitled to a full compensation.
To keep in mind
Even though there are many great payday loan companies out there, such as Loan 2 Payday, you have to understand your financial situation. Never borrow more than you can afford to return. Keeping up with your neighbour lifestyle is not worth the outcome.