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Common Reasons Why Borrowers Depend on Payday Loans

Payday loans are a helpful credit source, but accompany negative media narrative. Fortunately, the purpose for maiming was the high-interest rate, which was eliminated several years ago with the introduction of regulations. Payday loan borrowers get legal protection and for this reason, it has increased in popularity than traditional short-term bank loans.

LoanPig.co.uk offers good opportunities and short loans for all to secure a loan with ease and speed. The APR will be high, but you will pay it very soon. Even the fee amount involved will be lower than traditional bank loan processing. Besides, if repayment gets made on time then it is a great option that offers you space like 5 to 6 months to restructure your finances.

Common reasons why borrowers depend on the payday credit type

There are multiple reasons borrowers opt to choose payday credits. It is a magic route to get quick cash flow into your bank account.

During unemployment

Source: forbes.com

Unemployment is a phase that hits a person emotionally and monetarily. It is a point that no one desires to experience, but can suddenly put you in a financial situation, where it becomes challenging to handle your basic needs. A payday credit is an appealing option because –

  • You gain access to cash instantly
  • You persist your lifestyle similar before you got unemployed
  • You feel joblessness is not a big problem
  • You take a deep breath and feel motivated to look for another job opportunity

It is wise not to choose payday loans but try other ways. You can get job seekers allowance. Besides, cut on spending as much as possible from your savings. Take any kind of job until you land your dream job.

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For merging other debts

Many borrowers apply for payday credits to remove another debt. It can be a credit card debt or a loan from another lender. It is a wise decision when the advertised loan interest is less than what the debtor already owes.

Usually, the switch can be bad because there are other bills, which can accumulate to a huge amount. Borrowers can choose the debt consolidation feature. It pools all the loans together, which becomes easy to repay and less risky than using the payday option.

Avoid humiliation

Source: passiveincomemd.com

You can borrow small loans from friends and family, which is less risky than choosing a professional lending service. Besides, there are hardly any worries about paying interest.

Unfortunately, there are stories that borrowing from friends or family has caused friction, which damaged their relationship. Therefore many people find it better to approach a lender and pay interest. You can avoid embarrassment and humiliation related to taking a loan from someone you know personally.

Holiday loans

During Christmas, parents feel eager to gift their children with items or things they wish for. Payday loans seem to be the best answer. They get funds needed for the holiday period, which gets repaid with the New Year’s salary.

Parents may get tempted to borrow big amounts to purchase everything their children dream of but overlook the debt cycle. It is hard for parents to explain to their children that the gifts asked for are unaffordable, especially when Santa is assumed to bring them. Ensure that you consider your affordability before applying for a payday loan.

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Support during poor credit scores

Source: upgradedpoints.com

Payday loans carry a bad rep so many people borrow from banks or other lending institutions. Here, if your credit score is not good, your loan applications get declined. Alternatively, payday lending services approve bad credit loans. The approval is based on other criteria like affordability. Nevertheless, rather than applying for a payday loan, it is better to work in making your credit score right by paying bills and debts on time consistently for more than 6 months. A high credit score will give you access to loans with easy in the future.

Pay bills

Payday loans are a cool option to pay the high utility bill. Nonetheless, it is wise to look for ways in cutting your utility costs. Find ways to control energy usage like getting better home insulation instead of wasting money on gas. Thick curtains can sustain heat indoor and is not a costly switch. Never leave the shower running for hours instead, have time limits to reduce wastage of hot water.

For urgent medical treatment

Source: vitalrecord.tamhsc.edu

Medical bills need to be paid, or it will accumulate like any other kind of debt. An urgent medical treatment or surgery is a key reason why people depend on short term loans. However, to circumvent payday loans it is better to have proper health insurance coverage because a medical crisis can be costly.

For paying mortgage installment

People debate that missing mortgage installment is worse than getting a payday loan. It is because the mortgage provider starts assuming that you cannot afford the home. If you persist on delayed payments they take steps against you. You need to discuss a suitable repayment plan with the mortgage lender or downsize your home instead of applying for a payday loan.

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Pay overdraft

Unregulated overdrawn is frightening. You get penalized, and with payday loans people avoid it. Steps must also be taken to ensure that you don’t overdraw.

Pay unanticipated debt

Source: experian.com

Everyone wants to stay miles away from debt, but it can pop up unanticipated. For example, your father died, and so you inherited his debt. You will need to clear it as fast as possible. You will use payday credit to slip away from this situation.

Things to know

As another kind of loan is hard to get, payday loans have become popular for raising capital quickly rather than wait and miss on opportunities or during an emergency. People who are desperate for cash and have no time in going through the time-consuming traditional loan approval process only to get rejected and repeat it with another lending institution find a payday credit option quick to pursue.

Bank loans lay open to an inquisition, while a direct payday lender does not prioritize the aspect where the borrower will use their cash. The disclosure made to payday lender about your borrowing is just for statistical purposes. You can use the amount to pamper yourself or go on a tour or pay a delayed installment, the determining aspect of approval will be your capability to repay the borrowed amount.

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