Why do people turn to Payday Loans?

Payday Loans have been getting a lot of press coverage lately and so I thought I’d share with you why people turn to Payday Loans to help with their finances. Understanding this may hopefully give people a different opinion on these loans.

Yes these loans have huge interest rates associated with them and this can seem like they are ripping people off. The fact of the matter is that the interest is only charged over a short period of time so the APR which is for the year doesn’t reflect the true cost of interest. It’s best to work out how much you will need to pay back.

Everyone has different financial circumstances. Many people will struggle to make ends meet every month. Their are people that have bad credit history and have no other means to get the cash. Their are people that need the money to pay for emergency situations and they simply haven’t got the money at that time to pay for whatever emergency has arisen, such as boiler breakdown, faced with huge repair bills.

Some other reasons why people use Payday Loans

  • Cars broken down
  • Emergency medical treatment
  • Unexpected travel costs whilst abroad
  • Short term car finance – to pay the deposit
  • Banks won’t lend you the money

If you are in a situation where you need short term cash quickly, consider your options. Can you borrow off family or close friends? Does your bank account allow you to go overdrawn without hefty fees? Can you wait until payday? If you really need the money today, then go to a same day loans company but remember to pay it back on time, otherwise the interest will mount up and that’s when you’ll get into financial difficulty.

How to avoid the need for Payday Loans

  • EBay stuff you don’t need
  • Budget your outgoings so you can manage your finances better
  • Create an emergency savings fund for these situations
  • Cut back on luxuries

If you are faced with an urgent need for cash, why not ask for an advance from your employer. Some employers will agree a payment plan to help you out and usually interest free.