Small Payday Loans
Small Cash Advances in the UK are becoming increasingly popular for people with bad credit in search of funds to last them until their salary date arrives. The payday-loan provides people in need of money small to medium sized amounts of cash that can then be repaid upon payday. The idea behind the salary advance financial product is short term lending for immediate money requirement when a borrower finds him or herself in a sticky situation. As a result of them being short term in nature they come with hefty set up fee’s and a higher annual percentage rate (APR) than the more traditional forms of borrowing money, such as a bank loan or an overdraft facility.
These small to medium sized loans were developed to fill the gap left in the market by the banking industry that didn’t want to enter into short term lending. Primarily the users of payday loans in the UK have poor credit history, defaults, ccj’s, a low income and other unpaid debts, but due to the efficient nature of this loan product, with loan applicants being able to obtain funds into their current account in as little as 15 minutes to one hour, a wider variety of people from society have started to utilise them, such as people in the Army, Doctors, Nurses and managers of companies. Some payday lenders in the UK have entered into business loans to also fill the short term loan gap left in the market by high street lenders.
Tiny loans with a high interest rate are frowned upon in a modern society that has took a severe bashing from the financial services industry, but due to the continuing economic uncertainty and the increasing level of reforms to the welfare state, the poorer people, who often rely on short term cash advances, have little or no other choice of securing the monies they need to pay urgent bills and to put food on the table.
It is reported that in 2013 2 million people living in Great Britain will utilise shorter term loans to fulfill their cash need.
Hostility is growing in many corners of society with regards to the lenders operating in this short term credit market. The FSA undertook an investigation into payday day lenders and wasn’t very happy with what it saw. Lenders in the UK have been flouting consumer credit guidelines by lending money to people who more than likely will not be able to afford to repay the loan, they were also found to be rolling over loans successively sinking many people into something called the ‘debt spiral’ a point in which someone is having to borrow money from lenders to pay other lenders. This reliance on short term credit that comes with hefty set up charges and interest rates means that ultimately the consumer will end up facing bankruptcy.
More recently, payday lenders have been coming under scrutiny for their shady advertising practices, practices that look to make the short term loan solution they offer more appealing to a wider variety of people whom would be making a bad financial decision to enter into a loan agreement with a P-day loan business when they could get a better deal elsewhere.
The Kerry katona advert promoted by one payday company has now been banned, and it is reported that Kerry herself has entered into Bankruptcy for a second time. That advert was geared up to make the younger generation think that these loans were a quicker, better, alternative to bank loans.
Payday loans should be considered as a loan of last resort. This means that anyone looking for cash should explore all of the other avenues open to them before they get in contact with a short term credit company.
There are many charitable organisations that can offer assistance to those who need it, primarily food banks. Credit unions also offer a lending facility to people who need cash pretty quick, they charge fee’s for the loan set up and money transfer but their interest rates are considerably lower.
Small-Payday-Loans.co.uk used to be the home of Sky Blue Loans, small payday lenders, it is now a finance blog.
Other Forms Of Credit
There are many other forms of credit available to people whom have adverse credit in the UK, doorstep loans are increasing popular, they can generally offer a more substantial amount of money to an applicant. The pro’s of doorstep loans are that the applicant doesn’t have to leave their home, the doorstep lender goes to them, they don’t even have to have a bank account as the credit is handed to them in physical cash.
Log book loans are another option, similar to payday loans and doorstep loans, but they are secured loans, they are secured against an applicants asset, their vehicle.
It is important to keep up with the repayments on all forms of credit, secured or non secured, as failure to do so will result in blotches on credit files and reduction in credit scores. Unsecured loans can turn into secured loans should a lender utilise a bailiff to obtain goods to the value of the money owed to them.
Payday loans are Regulated by the Office of Fair Trading under the Consumer Credit Act 1974.