Given all the misinformation on taking out a payday loan, we at Paydayloanbuddy believe that giving you an honest review of why taking out a payday loan may not be the right type of loan for your individual circumstances.
The first thing you need to know about taking out a Payday loan is that it is a very costly way to borrow money. You should carefully consider your alternatives or consider other options. If you are sure this is the way to go, you must be certain that you are able to pay it back in full as set out in the terms, or you will find yourself in a very difficult financial position that will soon spiral out of control.
Payday loans were intended as a short-term solution until your next pay date. In return for lending you the money, you will not only repay the initial amount borrowed, but you will also be hammered with interest and charges, usually at a much higher cost than other types of loans.
You will also need to check if you have to repay the money back by the next payday, or whether your lender has agreed to allow you an extended repayment period.
Because of the nature and high cost of these types of loans. The Government has intervened with the cost of payday loans now being capped by law, under rules made and set out by the Financial Conduct Authority (FCA). Which now means that there is a limit on the amount of interest and default fees that you can be charged.
Therefore, if you take a loan out for 30 days, you will pay no more than £24 in fees and charges for every £100 borrowed, and if you fail to make the repayment, the most you can be charged in default fees is £15 plus interest on the amount you borrowed. So, you will never pay back twice the amount that you initially borrowed.