If you’re considering UK payday loans there are many issues to keep in mind. Although such loans can provide you with emergency funds , there are many issues to keep in mind. It could affect whether or not you take out a loan, and issues if you decide to borrow money through the short-term loan. Here are some key issues to keep in mind.
1. It has a high average APR
The average annual percentage interest rate (APR) of payday loans UK can be quite high. That’s an important issue to keep in mind as the cost of the APR can be quite high compared to an average credit card. That can cause a lot of financial problems and debt, so if you’re uncertain about whether or not you can repay the loan. If you’re unable to do that you should consider other options in order to avoid major debt problems.
2. It prevents borrowers from repaying 200% of the loan
The FCA has passed new rules last year that prevent borrowers from being required to repay over twice the amount that they originally borrowed. The goal is to address the issue of increased debt. Besides that, in the case that a borrower takes out a loan for 30 days then repays the money on time, there’s a cap of 24 pounds in fees/charges per 100 pounds that are borrowed.
Not only that, but there’s also a cap on default fees. If you don’t pay back the loan by the due date, the lender can charge a maximum of 15 pounds in default fees. These are key features that will make it easier to repay your loan, which is certainly a plus.
3. You might be offered a rollover/deferral
This is something that might be offered by a lender. If it’s offered the lender is required to provide you with an info sheet that includes details of free advice about debts, before the loan is rolled over.
Rolling over a pay-day loan might seem like a good choice. However, it can quickly result in a lot of financial problems. That because you’ll have to repay a lot more money in terms of interest and fees. That could result in a spiral of debt that you likely want to avoid. It could make it difficult for you to pay for basics that you need, such as food, clothes, and shelter.
These are just some of the issues to keep in mind before taking out a payday loan.
4. You might have to set up a recurring payment
Before you take out a short-term loan such as a payday loan you might be required to set up a recurring payment. This is also referred to as continuous payment authority. It allows you to use a debit card to directly withdraw money on the repayment date.
If you don’t have enough money to repay the payday loan in full you might be unable to cover other bills, or go over your over-draft limit. Another result could be bank charges.
http://ift.tt/29dvoWF
No comments:
Post a Comment