Loan Sharks!! Debt-predators!! These are the terms often used by critics to describe payday lenders in Britain. Payday loans are often considered as taboo in the country as they are offered at high interest rates with staggering APRs upto 10,000% !
But are these lenders really predators? Why are the loans offered at such high APRs?
Fact-
Payday Loans are short-term unsecured loans ranging from £100 to £1000. These loans are usually given for a period of one month and are repayable on the borrower's next paydate. The interest is charged at a nominal rate of 25%. As the customer repays the loan after one month, the high APRs cease to matter anymore. Bank overdraft and credit card default charges cost more than a payday loan. APR is calculated on the basis of the interest rate and the term for which the loan is taken. That is the reason why APRs for payday loans often reach upto 10,000%.
Payday Loans are mostly taken when people suddenly face an emergency or a crisis in their life. An unexpected medical bill, pet falling sick or a sudden car repair, emergencies may strike us any time. During these difficult times, payday loans come to the rescue and help these people in crisis. As a matter of fact, payday loans are the only means of fast and emergency cash during difficult times. Hence, these fast and emergency loans often turn out to be a favourable alternative to bank overdraft fees.
It's very easy to get a fast payday loan in Britain. All one has to do is to fill an online application form and if approved, the loan will be in their bank account on the same day. No need to send any fax or worry about bad credit.
Payday lenders provide emergency fast cash to Britons during crisis and hence terms like 'predators' or 'sharks' don't exactly hold true!!
