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When Can A Payday Loan Make Sense?

Personal_Finance / Debt & Loans Jan 31, 2019 - 05:07 PM GMT

By: OutreachMama

Personal_Finance

We can all wish that money grew on trees or that it came down like rain, but in the real world, it’s only sustained hard work that is going to produce the cash we need to make ends meet. In the UK, it’s clear that ends don’t always meet, however. Collectively, UK personal debt tallies over 1.6 trillion pounds.


That comes out to an average per household of 58,500 pounds – but most of that is mortgage debt. The “real number,” then, is more like 15,400 pounds per household.

Which Loans Are Best In A Pinch?

Aside from long term debts for major assets, like real estate and automobiles, it can be rather difficult to get the money you need when you need it. You may be left with only a few options, in fact.

You could try to borrow from a friend or family member, but that’s not always practical and you hate to bother them and to create a lender-debtor relationship with a loved one. If you own your car outright, you could get a title loan, but that means risking what may be your only way to/from work each day. Similarly, even if you have enough home equity, you may not wish to risk the roof over your head on an equity loan.

Ordinary bank loans are not typically available for personal expenses, especially if you have less than perfect credit. And if you don’t have a credit card, or it doesn’t have a high enough credit limit, credit cards might not be the answer either. Now what?

When To Use Payday Loans

One major option is payday loans. A payday loan is the shortest of short term loans, running only 2 to 4 weeks for the loan term. And you generally only borrow small amounts – 100 to 1,500 pounds total. To explore specific lenders and loan terms, check out this website: https://www.loanpig.co.uk/.

Now, it should be obvious you don’t get a payday loan if you just lost your job. If you are laid off for a very short period of time and you know for sure exactly when you go back to work, then it could make sense. But a payday loan is to tide you over “between paychecks” when you have a temporary, one-time cash shortfall AND you know you will have the income to repay it on time in one lump sum in a month or less.

You don’t need any collateral with many payday lenders, and many of them also do not care about bad credit. It might affect your rate but not your approval, and you won’t even have a credit check run on you. You have to be 18 or older, have an active UK bank account, and have a verifiable (and sufficient) source of income. There are few other eligibility requirements, aside from that you can’t have other outstanding payday loans or have defaulted on a fast cash loan in the recent past.

So if your roof needs immediate repair to stop that leak, or new shingles altogether, if your car broke down and needs transmission work or 4 new tires, if you have medical bills for an ER visit to pay, or even if you just don’t have enough to pay the bills and buy the groceries SHORT TERM, a payday loan could make sense.

Never take out more than you need or more than you can repay. Your loan payment shouldn’t be more than 25% or your next check, if at all possible, since you will have other bills to pay too. But bottom line is, in the right situation and used the right way, payday loans can get your through a financial rough spot where no other loan type will be available to do so.

By OutreachMama

© 2019 Copyright OutreachMama.com - All Rights Reserved

Disclaimer: This is a paid advertorial. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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