Payday loans are quickly becoming the most popular form of short-term lending and experts predict this will become more so in 2013 as we leave and repair from the âdouble-dipâ recession. Some banks have reported that people would rather get a payday loan than use their credit card as the rates offered by payday loan companies are lower than those from a bank or credit card.
Listed below are the Top 5 most common reasons that people choose to have a payday loan to help tide them over until payday.
Number five â Paying Bills
Cost of living is on the rise and essentials such as monthly bills are becoming harder and harder to afford there is less and less disposable income for families. People will approach a payday loan in this circumstance to stop their electricity (for example) being cut off, along with penalties and charges being added to their bills.
Number four â Urgent Repairs
Unfortunately things around your home and car unexpectedly stop working due to damage or just old age. When something like your washing machine, boiler or car stops working this is not something that can wait until pay day. This is when people consider getting a payday loan, so they can get the problem fixed now but pay when payday comes round. Sometimes putting a problem with your car off until payday can end up more expensive as more damage is done by using the damaged vehicle.
Number Three â Food Shopping
Towards the end of the month, a week before payday some people realise that they do not have the money to cover the weekly food shop and the offerings of the cupboard are looking very slim and not possible for their childrenâs packed lunch boxes. At this time families go to payday loan companies to buy the essential food items they require such as bread and milk.
Number Two â Avoid Bank Charges
The second most popular reason people go to a payday loan company is to avoid bank charges. Some banks charge up to Â£10 day for going over your planned overdraft. People realise that payday loans rates are not as high as this so they arrange for a payday loan to pay for the essentials to save themselves from a hefty bank charge.
Number One â Bad Credit Rating
The Number One reason people go to a pay day loan company is due to their bad credit rating. Most lenders of short-term loans will complete a credit check and not offer to those with bad credit ratings. However a lot of payday loan companies are happy to lend as long as the borrower is in employment and receives a regular wage.