If you have been following the news
recently you would know that the Office of Fair Trading had announced that
there will be no price controls on certain financial products and services such
as payday loans, pawnbroking and home credit. If you review the market for
payday advance users, you will see an increase in the number of applications
for the same. Even though the government recognizes the need for such high cost
services, people sometimes tend do criticize these services, or look at them
skeptically. This article gives you some key pointers to consider before making
such a biased opinion.
Payday loans are a way of getting
some cash when face an emergency or a cash crunch. You should consider the
following aspects of these loans before deciding whether you are for the
concept or not. A payday advance is meant to be a short term solution, it does
lock you into paying a fixed amount every month for a long time period. Payday
loans do not require any collateral. You can apply for a payday loan, even with
a bad credit history, and expect to get a loan by the end of the day, that is
the efficiency of this service. The process of application, verification,
approval, notification and transfer of the loan takes place very fast with a
payday loan service.
You can get a payday advance,
without submitting any documents for verification, this is the no fax payday
loans feature that has been introduced by some payday lenders, since the
service itself is evolving. Genuine payday loan lenders display the terms of
the loan and the APR clearly on their websites, and they also inform the
customers through a warning-disclaimer that such loans are short-term loans,
and should not be considered as a long term financial solution. The typical APR
is calculated annually and this mode of calculation is not applicable to these
short term loans, which never last for a year. Displaying the APR is just a
legality that the payday loan lenders follow. Roll-overs are permitted in the
UK, but only when and if you get into roll-overs and extend your loan repayment
does the high interest rate affect you. Roll-overs are different from some
installment schemes provided by certain lenders. Installment schemes do not
follow the same pattern as roll-overs do, in fact they are of benefit to the
borrower.
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