Save £102 using a payday loan!
Can payday loans save you money? In quite a lot of circumstances then yes they can, if used correctly. When payday loans are best used to save money, is to stop you going overdrawn, and to stop those bank/credit charges that can work out a lot more than taking out a payday loan.
Lets look at an example, you bank with the HSBC, it is getting towards the end of the month, things are tight and you think you won’t be able to pay all your bills, you have 2 insurance payments that you pay monthly for £28 and £32, these are with premium credit. You have a vanquish credit card and the minimum payment is £26. Now everything else you pay for is covered with money you have in your account.
So you are about to have 3 payments rejected for a total of £86, HSBC will charge you £25 for every payment it rejects over £25, so there is £75 in charges just from your bank, now you will be charged £20 by premium credit for every declined payment, so add another £40 for your two insurance payments, Vanquis will charge you £12 for a missed payment, so add another £12.
That’s a total of £127 in charges for not paying £86!!! Now if you get a £100 payday loan to cover your outgoings for that month at an average charge of £25 interest per £100 you borrow, you will be able to pay your bills on time, only get charged £25 interest, and save yourself £102 in charges! That’s right, I just showed a simple way that a payday loan can save you £102.
I bet you was surprised to read that, considering payday loans get such a terrible time in the press, yet we hear nothing about the extortionate charges that banks and credit companies charge for unauthorised overdrafts and missed payments. For example, did you know a lot of banks charge £6 a day on a £100 unauthorised overdraft and that works out to an equivalent interest rate of 2190% APR! That’s more than the average payday loan. Yet we hear nothing in our beloved press about this, but we hear a lot about payday loan companies.
Payday loans do get some seriously bad press, and sometimes rightly so when people are not paying back on time and rolling the loans over and getting themselves into a lot of debt. But is that the fault of the person taking the loan out or the payday lender? People must know what their financial situation is going to be in 1- 31 days and know what they are getting themselves into. Yes there are times when something unexpected happens, like a car breaks down or washing machine goes pop, and you have to rollover your loan till the next month. But you can’t tell me that happens to more than 40% of the people who take out a payday loan, which is the amount that rollover their loan. And yes the lenders are not entirely blameless either, they also put charges on to rollover, try to take money back when told not to etc.. but at the end of the day they are a business and here to make money, and there are a couple of lenders (not on our system by the way) that try and claw back money off people who havent actually taken out the loan but have been a victim of fraud.
I think we should be looking as a nation at the causes of having to take out a payday loan, not payday loans which are the solution to the cause. What would be the alternative if payday loans didn’t exist? Would so many people need payday loans if bank/credit companies charges where fairer? Would we be taking out payday loans if the bankers didn’t screw our economy causing a recession and lost jobs? If house prices where inline with historic prices and not extremely over valued would we be taking out payday loans?
Looking at the above and how much they can save you, is it right that they get such a bad press?