What are the payday loans?
These types of loan are designed to be used over a short period of time. Specifically, they are advertised as a mean in order to fund the unexpected purchases that can emerge at the end of the month. So, when you are out of money and waiting for Payday loans. Here, unlike the conventional personal loans, these are arranged over a few days. So, it can be used in order to stop the gap between your income arrives.
How much amount can you borrow?
You can generally borrow up to £1,000; even though some lenders will restrict the size of your first loan they will tend to provide you with. Loan periods also start at less than a week and in certain cases it takes months. For instance, some lenders can offer you borrowing over five days to 5-6 months. Generally, there are no early repayment charges, but there are fees in terms of setting up the loan, as well as the interest, which is sometimes calculated on daily basis.
Are Payday loans very expensive?
Yes! These loans are little expensive, but it is not essential when compared to the traditional alternatives, especially as long as you pay them on expected time. You can borrow £90 from a lender for three days with the cost £8.37, which is expected to be a little less when compared to the bank related charges for the unauthorized overdraft. Also, an authorized overdraft can be better anytime, or can even be an interest- free, but these are not always counted as options.
However, the charges quickly tend to mount in case you miss the repayment or you want to decide to extend your loan.
Why are they so controversial?
Several campaigners who are against payday loans tend to point to the methods that borrowing can add up very quickly. They somehow also claim the lenders aim at targeting the most vulnerable borrowers and if you are not doing proper affordability checks on them much before granting the loans. Also, not all lenders cooperate with certain debt charities that try to help other people out. The cost is not always transparent and many lenders may seem to encourage the customer in order to take on more borrowing.