Payday Loans
How much will I pay?
The interest rates on payday loans are much higher than those on most other
types of borrowing. Conversely, however, at 31 days the terms of these loans
are much shorter than those on standard unsecured lending.
The cheapest £100 to £300 payday loans at the time
of writing* charge an annual interest rate of 1286.1%.
This sounds shocking, but the short-term nature of the arrangement
means that someone borrowing £100 would pay back £125 in total if the loan
is repaid within the agreed time frame of 31 days. Someone borrowing £300,
would have to repay £375.
You don't have to worry about administration fees with payday loans,
and while you should always be vigilant and check the small print,
there are no hidden costs with the majority of providers.
Be aware, though, some lenders will charge an additional
fee if you want to extend the loan period. Defaulting
could therefore prove very expensive and do little to
help your situation if you are struggling financially.
Use moneysupermarket.com’s payday loans comparison tool to
compare rates and to investigate the terms and conditions.
Continue to page 3 to see Is a payday loan right for me? >>
