What is a Payday Loan?

Many people have heard about Payday Loans and most usually this is because they et a lot of bad press. They may feel that they want to avoid using them, although they d not know what they are. It is always wise to find out the facts about something and why it could be risky before you decide to avoid something though.

Payday loans came about when lenders could see that there were no opportunities for those with a poor credit record to be able to borrow money. They felt that they wanted to therefore set up a lending business where there were no credit checks and therefore it was open to anyone. Due to the high risk of lending to those that have a poor credit record, the costs were set high and the amounts lent were small. Since they started there has been legislation put in place to prevent them from being able to change extreme levels of fees.

Payday loans are usually used by people who need to borrow a few hundred pounds for a few weeks. The loans are normally set up so that there is a direct debit set up on payday so that the amount of the loan can be repaid in full. This amount would be the money that was borrowed plus the interest and charges. They should tell you before you take out the loan how much this will be so it should not be a surprise. If the money is not available when they try to draw it out, then there could be problems. It is likely that charges will be added on to the remaining balance and these can be high. You should be able to find out what these are going to be if you look in the terms and conditions for the account. If you find the terminology too difficult then you could speak to the customer services department and ask them. The idea of setting up the direct debit on payday means that it is expected that you will have the money available to pay off the loan. However, if you have a lot of other money going out too, perhaps to pay other loans or an overdraft or bills, then there may not be enough left to pay the full amount owed.

Many people do not like payday loans because they feel they target the vulnerable. They feel that if people are considered to be too much of a risk for other types of loans then they should not get these either. They think that they should be protected and not able to get loans. However, for those that really need the money, they may find that it is just what they need. They may have an emergency which they need to pay for and find that the loan helps them to be able to do this.

Of course, each individual is different. Some will take the loan because they can and use it for luxuries and not ensure they will have enough money to pay it back and this could get them into trouble. However, others may carefully consider it, only take the amount that they need, get themselves out of trouble and make sure that they have enough money to pay it back so that they do not pay more than necessary. It is therefore difficult to argue generally whether these are a good or bad thing, but it is easy to see that they would be riskier for some people than others.

There are stories of people who were not able to pay back their payday loan and got huge fees and found it very difficult to manage to get it paid off in the end. Some people will get a payday loan form another company to pay the one they have and then find their debt goes up and up. However, there are also people who have used the loans to their advantage and paid them back on time and found that they helped them. The media loves a negative story and so these tend to be highlighted but it is important to know about them and make sure that the same things does not happen to you.

It is always wise to think hard before borrowing; considering whether you really need the money, whether you are prepared to take the risk and if you will have enough to manage the repayments. You should also compare different ways of lending and see which is the cheapest so that you can pick the best type of loan for you. Then it is wise to compare lenders to see which one you want to go with. Price is a big element but there may be other factors, such as customer service, which you could find are important to you as well.

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Is a Logbook Loan Too Risky?

Many people may not have heard of a logbook loan as it may come under different names. Basically it is a loan where you use your car as collateral. What happens is the lender will take a look at your car and value it. They will then find out if any other money is owed on the car and then calculated what value is left in the car and lend a percentage of that. Therefore how much they are prepared to lend you will all depend on the value of the car and if you have any other car loans.

The fact that they have some collateral means that they will lend you the money at a more competitive rate than some other types of loan. However, there are other more competitive rates out there, so it is wise to compare and see whether you can get something better. You may like to compare different loan types or different logbook loan companies to try to get the best possible deal that you can.

A logbook loan can be good if you need some money in an emergency and can find no other cheaper way of borrowing money. However, there are risks associated with it, like there are with any form of lending. As you are using the car as collateral, if you do not manage to make the repayments then the car can get taken and sold by the lender. They will use the money that they make by selling the car to pay off the loan as well as any other money owed on the car and there will not be anything left for you.

Therefore it is extremely important to make sure that you are confident that you will be able to manage the loan repayments. This will depend on many things such as your income, job stability, repayment amount etc. You will need to think through whether you feel that you will be able to manage those payments every month until the loan is paid off. It is worth thinking hard about it, particularly if losing your car is a scary prospect.

If you need your car for work, then it could be really bad if it is taken off you because you cannot repay the loan. This will mean that not only will you have lost your car but you will also have lost your job. Although the outstanding loan will be gone, you will really struggle without an income and so it could just be too big a risk to put your car up against a loan. Even if you are really confident that you will be able to repay the loan, it is a big risk that if something unpredictable happens that means you are unable to repay the loan, then you will be stuck without a car or job.

If you do not use the car for work or there would be an alternative way to get to work without a car, then you will not be quite so risky with a loan like this. However, it is worth thinking through the things that you use your car for and whether you are prepared to risk not being able to drive on these occasions. You could use it for the school run, to visit friends and relatives, for trips and holidays, for shopping or many other reasons. It could make your life very difficult and you may even feel cut off if you do not have a car.

The actual risk of a loan like this cannot calculated easily. It will all depend on an individuals circumstances. It is wise to think hard about whether you really need the loan and what would happen if you could not pay it and the car was taken. Consider whether you could cope without a car and how it would have an effect on your daily life if you had to manage without one. If you feel that you would not be able to manage easily, then you will be best to no have a loan of this sort. IA car can make such a huge impact on your life that losing it could be massive. It could be even bigger than if you have your house repossessed when not managing the mortgage as you could at least rent somewhere as an alternative but you cannot rent a car cheaply enough to use it as an alternative to ownership and so it could be even more difficult.

In most cases it is probably likely that a logbook loan would be a big risk. Only if you do not rely on your car or if you feel there is no chance that you would miss any repayments then should it be considered. It is worth thinking about whether you really need the loan, what the alternatives are and whether you ca find a better and less risky option. Even if you have to pay more for a less risky option, it could be worth it.

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What time of Life is Best for Getting a Loan?

Borrowing money is always a risk. If you take out a loan, then you will be committed to making a certain amount of repayments over a certain time. This means that you will have to be sure that you will have that money available for you to be able to do this. If the loan is quite a short term one, then it is easier to know whether you will have the funds. If it is a more long term one, then you will not be able to have such a good idea of what may happen in the future with regards to employment, illness, expenses etc.

It is always wise to have a good think before borrowing any money about how easy it will be for you to pay it back. Consider whether it might be better to wait a while before you borrow so that you are in a better financial position or whether you feel this would be a better time as it might be harder in the future. If you are not sure then there are several main things that you should consider.

Family is an important consideration. If you plan on having children in the future, then expenses will go up. Consider whether it is likely that you will still owe money when they are born and if this will be something that you will be able to manage. Think about whether you currently rely on two salaries and if that will go down to one and what effect that will have on your finances and if that will mean that you can no longer afford the repayments. If you already have children, then you will be aware that they get more and more expensive as they get older and if you are struggling it might be better to wait until they are old enough to earn some money before you borrow yourself. Of course, that can be a big of a juggling act as you may have to reduce working hours to look after elderly relatives or even be near to retirement so not able to get a loan at all.

Work is also a very important consideration. You need to think about whether you have a secure enough job to be able to make the repayments and whether this is likely to remain the case for the full term of the loan. It can be more reassuring if there is more than one salary coming in to the household so there will still be money available even if one person is not working for some reason. It will also depend on what skills you have and what demand there is for those skills as you may find that you will easily get a new job, should you be made redundant, but it all depends on how in demand your skills are. Also consider your health and whether there is any risk that you may have to give up work because of it. Obviously no one wants to imagine this might be the case, but you will know whether it could be a possibility.
It is also important to take a look at what other debt you have. If you already have a lot of unpaid debt, perhaps a credit card, other loans or a mortgage then you need to consider that you already have a lot of responsibility with regards to finances. If you take on even more debt, you may find that you are in a situation where you find that you are out of control with your debt, that you cannot afford to make the repayments and face charges and other problems such as court demands or repossessions. No one wants to be in this situation, but if you just have a few too many debts, it could lead to this.

So there is not really a specific time in life that is best for getting a loan. In fact with most borrowing it is probably best to try to avoid it if you can, or think very hard about whether that borrowing will improve your circumstances overall. It should be a decision that you spend some time over as it will have a significant impact on your life. Debt differs and getting a mortgage is a very different type of debt to a loan to pay for a holiday, but whether you can justify the loan will depend on many factors. You will need to consider your current financial and work situation, your family situation and how much you want to borrow. Work out how much the repayments will be and see whether you can afford them and if you think this will be true in the future as well. It is not easy to predict the future but you can assess the risk if you consider all of the important factors.

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