Monday, May 16, 2011
Category:
Consolidation
According to moneysupermarket.com, demand for payday loans through their website has increased by 58 percent compared to the same period in April. A combination of factors has reportedly led to the increase – the rising cost of living and the recent run of costly bank holidays.
As a result, moneysupermarket.com is advising consumers to ensure that a payday loan is the most appropriate solution for their situation. Consumers are also being warned to ensure that they understand the terms and conditions prior to applying for a payday loan in a bid to avoid financial difficulty.
This short-term form of lending is aimed at consumers who are struggling and need some money to see them through until their next pay day. Payday loan companies tend to offer amounts from £100 to £300, with sums reaching £1,000 in some cases. Successful applicants can have the money transferred into their bank account on the same day, which is appealing to those who require a quick injection of cash.
However, it has been pointed out that consumers face very high interest rates when it comes to payday loans because they are taken out on a short-term basis. In fact, moneysupermarket.com has calculated that the rates for some payday loans can reach 2,000 percent APR (annual percentage rate). Interest rates reportedly vary significantly; however, a customer who borrows £100 will typically have to pay back approximately £125 over 31 days. A larger loan of £300 is reportedly likely to cost consumers approximately £375.
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Homeowners who may have taken out several expensive payday loans and credit cards to get by could consider tying these existing debts up with a secured loan. One of many finance options available, a secured loan for
consolidation could allow borrowers to replace multiple monthly repayments with a single monthly repayment that could even be lower than the sum of current outgoings. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
