Payday loans have grown in popularity over the last couple of years with the economic climate putting the squeeze on household budgets. As a result more people are turning to short term loans such as logbook loans and payday loans. A payday loan is basically a credit agreement that a person will enter into with a loan provider. As with other short term loans, they are extremely easy to apply for with many companies offering quick and 10 minute money only highlighting the appeal of these types of loans. Large brokers such as Wonga have grown in size rapidly as more people turn to short term loans. With more websites appearing daily, TV commercials using clever marketing ploys and day time TV being saturated with quick cash adverts, the short term loan market has grown rapidly. Payday loans are arelatively new concept and it is no coincidence that their rapid rise has coincided with the recession and the fact that more people are struggling financially.
As they are easily accessible now, more people see them as the ideal option without really considering if they a suitable option. Any finance solution that openly advertises annual interest rates of 4000% must set the alarm bells ringing. A payday loan can be the perfect short term loan solution and in many cases they are openly marketed as loans that can help you financially until payday meaning that once you have been paid, you can quickly repay the loan back in full. Perfect for emergencies and always a viable option for those who may need to borrow money for a few weeks. The more reputable companies will only borrow for a maximum of 1 month which ensures that the loans are repaid within the set time period.
There are many alarming stories of people getting into huge amounts of debt through payday loans. In many cases people take out payday loans and are unable to pay them back meaning that the interest rates grow rapidly. The government are currently putting in place set regulations that lenders must comply with to ensure that they are lending responsibly. Failure to do so will result in the payday loan companies being forced to close. These regulations are in place to crack down on companies who are borrowing irresponsibly.
It is important to consider whether a payday loan is the right option for you. If you are struggling with financial debt then taking out a payday may only add to your problem. If you need cash quickly and can pay it back over a few weeks then this type of loan can be ideal. Payday loans are a specific loan solution and unfortunately as other traditional loans are not accessible to those with bad credit, more people are seeing payday loans as the ideal option without really researching.
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