While we in no way condone all the fear-mongering that goes on about payday loans, with people saying that it is the worst thing to hit the UK financial market in decades and that it is just another way of making the poor even poorer, we do acknowledge the fact that there are some risks involved with these loans and that the individual needs to be careful and cautions when taking out a payday loan in the UK. In this article, we will point out the few precautions that you need to take if you wish to avoid any negative experiences with these loans.
The main reason why payday loans can be dangerous are the high interest rates that are very, very higher than with other loans. Add to that the fact that the law does not limit the height of these premiums and you have situations in which the APR on payday loans can amount to more than 2,000% or 3,000%, which is something that everyone should be careful about.
This is why you should always take out only that much money that you will be able to repay when the time comes. If you know that you will have £500 to spare the following month on your payday loan repayment, do not take out £600. Also, if you are not sure about whether you will be able to pay back the money, do not take out the payday loan in the first place. You might encounter the interest rates that will accumulate to epic levels and that will make it very difficult for you to repay them.
You also need to be aware of the fact that you will need to repay your payday loan as quickly as you can. If you have the money to repay it, then do it. Any procrastination in this regard might once again put you in a situation in which the interest rates accrue and you face interest rates that are crippling your budget.
