The answer to whether payday loans for very bad credit is a good idea depends on whom you ask. If you ask this question online, the media will portray these types of loans as being the worst thing possible. You will find horror stories about payday loans getting people into debt of thousands of pounds and lenders preying on those most vulnerable. However, if you ask the millions of people who have taken out the loans in times of need, and found them a godsend, you will get a different answer.
What Are Payday Loans?
Do you know what a payday actually is? To be able to judge whether a payday loan is a good or bad idea you have to understand what is involved with the loan.
Payday Loans Allow You to Borrow Small Cash Sums
With a payday loan, you can borrow a small cash sum. Lenders usually offer between £100 and £500.
The majority of payday loans for very bad credit are applied for when people have been met with an unexpected financial outlay and payday is some time away.
A small amount of money ties you over so you can get out of a sticky situation that causes anxiety and stress. Of course, you do have to make sure that when payday comes around you can afford to repay the loan and clear it. This is the key to success with such a loan.
Loans Can Be Repaid Over One to Three Months
Payday loans can be paid back in full the next time you are paid or the loan may be spread out for up to three paydays or months.
Spreading the loan out makes the repayment lower, but the downside is that interest is added daily. With this in mind, the total amount you have to repay will be more.
When considering a loan you do have to find a happy medium between keeping the interest down to a minimum and not leaving yourself short of cash on your next payday.
Two Sides to Payday Loans
There are two sides to every story so they say and the same applies to payday loans. They can be a disaster if the loan is unaffordable but if repaid as agreed they can be a lifeline in a time of need.
Here we are going to look at both sides of the loans, the good and the bad.
The Bad about Payday Loans for Very Bad Credit
We will start with the bad. Perhaps calling the loan bad is not correct, as there is nothing wrong with the loan itself. Rather the unethical lenders who handed out loans in the past to people regardless of whether they could afford them.
The bad name also stems from people who took loans out and who failed to repay them on time. Rolling them over repeatedly, attracting even more interest and fees.
Payday loans can be a very bad idea if:
- You borrow more than you know you can afford to pay back;
- You know that repaying the loan on your next payday is going to leave you without enough money to live on until the following payday;
- You find yourself short of money at the end of the month on a regular basis;
- You are considering applying for a payday loan to pay off another loan.
The Good about Payday Loans
Now let us take a look at the good to payday loans. Yes, despite what the media wants you to believe, millions of people in the UK have benefited from them.
Payday loans can be a good idea if:
- You have no doubt that you can repay the loan as agreed on your payday;
- You need to borrow a small sum of money as a one-off due to an unexpected financial outlay and you don’t have the money;
- You have previously worked out your finances and when repaying the loan you are not going to be left short of money and have to borrow again;
- You understand the terms and conditions of the loan before signing up.
Avoid Unethical Lenders on Facebook
Thankfully, most of the unethical payday lenders have been driven out of the market. However, there are still some out there and the new craze seems to be targeting people with poor credit ratings on Facebook. Unethical lenders have posed as individuals on the social media platform trying to get people to take out loans. This is something you should avoid if you are considering a loan never be tempted by Facebook ads or posts.
Making an Application for a Payday Loan
With the FCA now regulating payday loans, they have become more transparent. Payday lending is moving in the right direction with caps in place as to how much lenders can charge in interest and fees if the loan becomes unaffordable.
This has led the way for ethical lenders to offer affordable loans online and one way of applying for a loan is with our help.
We work with a large panel of UK lenders who offer some of the most competitive rates and affordable loan options.
We can introduce you to lenders willing to consider all circumstances, even poor credit ratings. Lenders will consider verifiable income, along with credit ratings. The lenders we work alongside will want to know how much you earn and what you pay out each month. From this, they will determine if the loan is affordable.
One of the biggest advantages is that you will be given an instant decision. If you are approved for payday loans for very bad credit, you can then look over the terms of the loan and sign up. The cash from the loan may be paid into your account on the same day, often within a period of hours. This can be a lifeline and reduce stress and anxiety, providing of course you have ensured you can repay the loan on time.
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