The causes of bad credit

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The banks may well be responsible for the economic meltdown we find ourselves in but that doesn’t mean they are going to help us get out of it. In fact quite the opposite. Private individuals and business’s alike constantly find themselves falling foul of the stringent lending guidelines laid down by the big banks. Help is at hand though as those feeling the pinch can turn to payday loans to help fill your pockets.

Recession leading to rise in online loans

In today’s climate, where so much of the world are having to work really hand to get out of recession, it is the man or women on the street who are really feeling it. Payday loans are helping the very same men or women on the street who the banks are turning their backs on. Even the government are focusing on big business and manufacturing so its payday loans who are helping the average Joe.

Wonga – UK payday lender, moving into business loans

Recent developments have even shown that payday loans can work in the small business sectors with one UK payday loan company starting up business loans. Their interest will calculated at somewhere between 0.4 and 2.0 percent per week and will be available to all business’s no mater how proven or novice. So its now all parts of society reaping the rewards from payday loans.

The UK company can lend to company’s banks can’t as they are ruled by a different covering body, have to adhere to different guidelines and don’t take deposits. Banks are currently acting as a storage facility for you money whereas its payday loans that a pushing the economy forward. It seems that at the moment banks only lend to those who don’t really need it which is stifling growth. So for all the bad press payday loans seem to get from certain circles I would hate to see how we would cope without payday loans filing the void left by banks.

Payday loans are designed to answer short tern financial woes of people short of cash during an emergency or unexpected event. But before you jump into that payday loan, here are some considerations that you must be aware of:

Consider what the loan is for

You need to think and assess what the loan is for. Is it really for that unexpected expenditure or due to cash flow reduction? Because of the high interest levels that an individual can accrue out of payday loans, it is very important that the loan should not be taken against living expenses. Meaning paying for your monthly bills and other living expenditures. If this is the case, the borrower can be trapped from repetitive debt. Resulting either to not paying your loan on time or acquiring another loan after paying the original one.

Will you be able to repay the interest?

Since there is no definite guidelines on payday loans, the interest rates can fluctuate depending on the lender and duration of the loan agreement. The interest rates can approximately start at 200% and can even go higher. With this in mind, it should be noted that before applying for a cash loan, you should calculate the total repayable amount at the end of the agreement.

It is also important that you read and understand details in the loan agreement especially how much you will be paying and when it is due. This can help you assess if you can comply to the agreement.

Do you really have no other alternatives for the cash you need?

Due to the exorbitant rates imposed by the lenders, you need to exhaust other means before jumping into that payday loan. You can consider asking family and friends for the cash you need for that unexpected expenditure. You can also pawn your jewellery for fast cash or get your expensive things and sell it to others.

If you have done everything and still can’t hold of the money you need, it is important that you are fully aware of the payday loan you’re getting into.

After being aware of these considerations, payday loans should be taken responsibly. It is a tool to help ease our short term financial crisis and not to cause people to be in a cycle of debt.


Warning: Late repayment can cause you serious money problems. For help, go to