Short term loans are a great way to get your hands on the money you need, fast. The mass of online lenders these days has taken the meaning of “fast cash” to a whole new level. But as with most things, these payday loans should be used in moderation and only after careful planning and evaluation of the borrower’s financial situation.
Because the opportunity for misuse is so high with payday loans the UK Government and Office of Fair Trading have recently deemed it necessary to start putting regulations into place to help stop people from getting into financial difficulty and to encourage lenders to help people who are already struggling with debt.
Payday loans are meant as a short term solution, here are some examples of what payday loans should and shouldn’t be used for.
Payday Loans Should Be Used For…
- Relieving a temporary cash shortage
- Covering expensive financial emergencies
- Avoiding bank & credit card fees
Payday Loans Shouldn’t Be Used For…
- Solving a long term debt problem
- Regularly paying your monthly household bills
- Paying off a previous payday loan
Because of the abundance of payday loan lenders online today it can be difficult to decide which one would be best placed to loan you the money you need in a safe and responsible manner. If after looking carefully at your current financial situation you decide that a short term loan is the right help for you there a few things you should consider when choosing a lender online.
Firstly all charges and fees need to be 100% transparent and well laid out from the start. Secondly the lender should abide by the guidelines set out by the Office of Fair Trading and should clearly display their Consumer Credit License number. Lastly, it’s a bonus if the lender is a member of the Consumer Finance Association which was set up to promote responsible lending and fair trading amongst its members. Whilst this isn’t necessarily a must, it indeed shows that the company is committed to helping its customers in a responsible manner.