Short term loans may seem like the answer to everyone’s financial troubles and may look like just another way to get money fast. But as with most things if something seems too good to be true, it usually is. Although payday loans can genuinely help a lot of people out of tough situations they shouldn’t be taken lightly, in this article we’ll show you 3 things you should avoid doing when applying for a short term loan.
Not reading the small-print
Although the Office of Fair Trading has advised the UK government to introduce legislations to the payday loan industry there are still a huge amount of lenders out there who are willing to charge hidden fees, extortionate interest rates and unreasonable repayment plans. The first thing you should always do when researching a potential lender is read their small print – by law all UK short term loan lenders are required to clearly display their interest rates wherever they advertise of offer their services.
Taking out more than one payday loan at a time
Ever heard the term “biting off more than you can chew”? Short term loans are designed to be paid back within 30 days or when you receive your next pay packet. If you’ve found yourself without the means to pay back your loan at the end of the month you should contact your lender immediately – at no point should you consider taking out another payday loan to pay off your current outstanding debt as this will only lead to more financial troubles further down the road. Remember, honesty is always the best policy.
Using a payday loan for the wrong reasons
Payday loans are designed to provide fast cash flow relief to those unfortunate enough to find themselves short of money part-way through the month. Therefore, they shouldn’t ever be used to pay off existing debts, to spend on risk-taking activities such as gambling or to buy unnecessary items you otherwise wouldn’t be able to afford.