People all over the UK who have taken out a payday loan through a short-term lender are now stuck in a spiral of debt caused by the high interest rates charged by payday loan providers.
What is the Payday Trap?
The payday loan trap is a downward spiral of debt caused by high interest rates and penalty charges when you are not able to repay your payday loan on time.
Once your repayment date has passed, the payday loan provider will often add fees to your loan along with the interest continuing to grow on a daily basis. When you find yourself in this situation you are offered a route out, namely repaying the interest and fees on your loan and rolling it over until next payday. Often you might be offered some extra cash at this point, which means come next payday you will have to pay even more back… and so the cycle continues until you are up to your elbows in debt.
The best way to avoid this situation is to make sure you only borrow exactly what you need and can definitely afford the loan repayment when it is due, this way all you have to do is make the repayment and forget about it until you are struggling again (or not, hopefully the need for a payday loan is a one off).
You can get out of the payday trap by consolidating your payday loan(s) into one simple, affordable monthly payment with a loan provider offering better interest rates and longer term solutions. A great product to use is a guarantor loan, they offer help to people with bad credit by using a friend or family member to back up the application; the idea being if a friend or a family member trusts you then so will the guarantor loan lender.
The great thing about guarantor loans offering finance for people with bad credit is that people with payday loans will often have a less than perfect credit score, meaning banks and other more traditional lenders will not lend the money required, even if the money is only to be used for consolidation.
You can get a guarantor loan from anywhere between £1,000 and £5,000 with loan terms ranging between 12 months and 60 months. So if you are struggling with massive payday repayments then you could pay them all off and pay what’s affordable, the product is very flexible.