Payday Loans

A payday loan is an amount of money loaned to somebody for a short period of time, designed to tide them over until payday, usually with very high interest. The average interest could be as high as 1,500%, compared with 22.8% APR for a typical credit card.

Therefore, if you’re looking into getting a payday loan it’s important to understand the consequences if you don’t pay it back on time. The loan should be repaid in full with interest by the agreed due date (usually your next payday). So, don’t borrow unless you are sure you pay it back on time, or it’s easy for costs to spiral out of control.

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Using Payday Loans for essentials

It’s important to remember that if you are using the payday loan for essentials, such as food and bills, you will need to pay for these expenses next month as well as the payday loan debt. Never take a payday loan debt out to pay for another one because this will lead to an uncontrolled cycle of spending.

Continuous Payment Authority

Many lenders will ask for a Continuous Payment Authority (CPA) to permit them to take payments from your account automatically. However, if you don’t have enough money in your account then this can lead to overdraft charges by your bank.

What are rollovers?

If you’ve taken out a payday loan and you’re struggling to make your repayment, then the lender may give you the option to roll the balance over to the next month. However, although this may be tempting, it can lead to additional charges and only delay the problem further.