Payday loans – one of few credit options for many

Things are getting tough out there. Inflation is at 4.9% (the highest it’s been in 14 years) and energy prices, in particular, have increased dramatically. They are set to increase again in April and, for many families in the UK right now, money is tight! If you have found yourself in an unfortunate situation where there is now less money coming in than what is going out, then you may be considering options for how best to borrow money to tie you over. Indeed, perhaps you have an emergency payment to make, such as a new washing machine or a repair to your car. If you don’t have enough money to pay for such an expense then you will need access to some form of credit.

Popular consumer credit products, including overdrafts and credit cards, can be good options. However, such avenues are often closed for people with poor credit scores. If you have a history of missing or being late with credit repayments, anything from a mobile phone contract to a utility bill to a loan, then this would have had an adverse effect on your credit score (perhaps without you even realising). Note that you can check your credit score for free online if you’re unsure what state yours is in.

Since it can take some time to build your credit score back up, those with poor credit scores needing access to cash urgently may find themselves with few options when it comes to borrowing. Enter the payday loan. Many of us will be familiar with these, even if you’ve never actually taken out one. Payday loans have received something of a bad rap in recent years, mainly owing to their typically high rates of interest. However, since 2015, the Financial Conduct Authority has introduced stricter regulations for companies offering these sort of credit products, including price caps and stronger affordability checks.

What I believe is most important when it comes to companies offering short term loans is that they are absolutely transparent with customers about how much it will cost to borrow money from them. Amongst providers in this space, one service stands out to me in terms of making it very clear to prospective borrowers: This company clearly displays how much interest customers will pay, and they even detail the exact cost of each monthly repayment. Such transparency is probably the main reason why they have an “excellent” rating on Trustpilot.

Borrowers should take great care to ensure they have a way to pay back any amount of money they intend to loan. If you are facing problems with mounting debt then you should call the National Debtline. If you are facing issues with your mental health due to debt or otherwise, speak to someone. Find a list of people you can call for free here.