Adhering to a budget

Notice: get_currentuserinfo is deprecated since version 4.5.0! Use wp_get_current_user() instead. in /home/cushteec/public_html/wp-includes/functions.php on line 3831

Many people, especially in the United kingdom depend on payday loans to cater for their budget deficit before the next payday. In the United kingdom have legalized the payday loan hence its wide usage by Britons. Other countries where the payday loan is common is Canada, Australia and the United States. This is because payday lenders provide relief in between pay periods, especially to the poor masses who can hardly afford to get alternative bank credits due to credit constraints.


Unsecured loans

paydayloansexplainedPayday loan is thus a small, short-term and unsecured loan that is only secured against a customer’s next pay check. Overtime, the world of payday loan has transformed from manual lending via lending stores to online lending where one simply applies for the loan online gets an approval then receives the cash through his or her bank account. The fee plus the amount lent is then electronically deducted from the customer’s account as soon as the customer gets paid by the employer. Many online companies are offering the service around the clock through their websites.

Payday loans fill the widening gap left by the other loan facilities that have credit constraints that cannot be met by a reasonable percentage of population- mainly the youth and the poor. Instead of turning to illegal sources of loans, the population goes for the payday loan payable the next pay day. This repayment requirement in turn reduces accumulation of debt for customers. The role played by payday loans is undisputed, apart from offering quick loan to the youth and poor; it increases household welfare for such population and also provides quick relief in disaster areas.

Critics of payday loans


However, payday loan is not all rosy but it has its thorns. The payday loan has been characterised by many critics as being predatory. This is because of the high interest payable by customers compared to the other credit services. The fact the payday loan targets the poor population; it is seen as draining money from the poor population. Payday loan lenders also ignore legal restrictions by charging very high interest rates, higher than that sanctioned by law. It is for this reason that payday loans are either illegal or un-viable in other countries.. In addition, this creates a debt cycle where the poor become dependent on this loan instead of working towards managing the available resources and saving up. The payday lenders take advantage of economic hardship to make profit, at times, super-normal profit.

It is therefore the responsibility of an individual to examine various loan options and make an informed decision as to whether to take a payday loan. Though to the poor and young population, who face credit constraint, such options can be slim or non-existent, pay check cash advances from employers or loans from family and friends are viable options. Let the informed decision be the key to financial freedom.


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