Warning – Instant Payday Loans Harm Your Finances

Payday lenders can offer the perfect solution if you are looking for quick cash, however quick cash doesn’t always = smart cash.

Below we highlight some of the ways that a hasty decision can lead to long-term damage to your finances.

Below we have highlighted just two of the many issues which may you may find should you choose to explore this alternative type of finance:

1. It could potentially damage your chances of successfully submitting a future mortgage application?

At the end of 2013 a BBC Newsnight report claimed that two thirds of mortgage brokers had experienced one of their clients having a mortgage application rejected, directly because of the presence of a payday loan on their credit record.

This is explored further in the following BBC article:

Even Full Repayment May Not Save You

Even if you have fully repaid the outstanding balance on time and in full, you may still have a problem in the future.

A recent report from the IPPR highlighted the fact that the most common use of payday loans is to pay for everyday expenses, such as groceries, gas, electric and water bills.

It is therefore little surprise that potential lenders will see the fact that someone has had to resort to using this frowned upon type of borrowing to pay essential bills as an accurate indication of someone living beyond their means.

For the full IPPR report, please check out the following report:

 

Mathew Lawrence, Research Fellow at IPPR (Institute for Public Policy Research), said:


“The fact that people are using payday loans to cover predictable expenses shows that it is not a financial planning problem they face but a problem of making ends meet. In a worrying new trend, young people are using payday loans to cover everyday expenses like their phone bills and rent, as well as their groceries and utility bills.”

Mathew Lawrence
Research Fellow at IPPR

Testimonial Mathew Lawrence

2. Failing to make repayments on time can lead to spiralling costs and charges

The consumer group Which? recently released findings indicating that payday lenders are trapping increasing numbers of consumers in a downward spiral of debt caused by exorbitant penalty charges.

25% found that they were hit with hidden charges such as high fees for reminder letters, and one in five (20%) were not able to make repayments on time.

33% of people were found to have experienced increased financial problems as a direct result of borrowing money from a payday lender with results being compounded by the fact that 57% of borrowers were encouraged to borrow additional money and 45% rolling over their loans at least once.

The following Telegraph article explores Which’s findings in greater depth.


Do you know what your credit file look like?

When was the last time that you checked your credit report? We strongly recommend checking yours on a regular basis and a visit to the Checkmyfile website to obtain the UK’s only multi-agency credit will provide you with all the information you could need.

Once there you will receive the opportunity to sign up for a one-off 30 day FREE Multi Agency Credit Report Monitoring period by clicking here, or alternatively if your free period has expired, you can order a comprehensive credit report for a single payment of £19.99 by clicking here.

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See more than twice the information compared to any other Credit Report in the UK

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Did you know there are ethical affordable alternatives?

If you are in need of quick cash but would like to explore more affordable options, we can help to provide you with options offering up to £500 loans within 1 hour and up to £10,000 can be with you 24 hours after submitting your application regardless of your recent financial history.

Our calculator will allow you to work out exactly how much you can borrow and pressing ‘Quick Application’ will result in the receipt of a number of quotes which have no fees and absolutely no obligation to follow the application through; all you will get is a range of offers so you can decide if one is right for you?

For more information see our Short Term Borrowing page.

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