Pay Day Loans: rarely a solution
Pay day loans increasingly are being used by people who are struggling to make ends meet.
There are a number of reasons for this: increasing cost of living, dropping income and rising debt payments. All these factors are placing a squeeze on many household budgets and increasingly making it more difficult for families to get to the end of each month.
However, pay day loans are rarely a solution and normally the first indication that someone needs help from a professional debt management company like Your Debt Expert.
Pay Day Loans Are Not A Solution To Get Out Of Debt
Rarely, except in exceptional circumstances, do pay day loans provide a solution and more often than not actually make borrowers circumstances worse, with interest rates of 4,000% APR and one in three loans being rolled over each months to allow more time to pay.
It’s not unusual either for those who take out the loans to begin missing other monthly payments, such as to their mortgage, rent or council tax. This is due to the way pay day loans are collected using Continuing Payment Authorities. This effectively means granting the pay day loan company the authority to deduct the money straight out your account each month as soon as you get paid.
Despite these types of payment instructions being governed by the Payment Service Regulations 2009, they are notoriously difficult to stop, unlike other methods of payments such as standing orders and direct debits. Banks often refuse to stop them or claim they are not able to. The pay day loan companies rarely agree to not take the payment, but instead offer to roll it over for another month adding on more interest, penalties and charges, making your debt worse.
But there are solutions. Scotland has a number of formal debt remedies available to help debtors with pay day loans and other debts that will deal with them and can stop the paymPay day Loans Are Rarely A Solution If you Are In Debtents, as well as the interest and charges.
Consider An Alternative to Pay Day Loans
The most important thing someone can do, before they take out a pay day loan or even after they have taken out a pay day loans is seek expert debt and financial advice. This advice should never be paid for and reputable organisations, even private organisations should never ask you to do so.
Reputable organisations follow good money advice practice and discuss all options, so avoid those organisations who just want to speak to you about one solution, such as protected trust deeds.
Rarely will there be situations where there are no solutions and rarely will a pay day loan be a solution. If you are struggling the best advice is to get advice, not more pay day loans and more debt.