What you should know about payday loans

You can’t always avoid payday loans, but follow a few tips to keep them more manageable.

08:22 12 September 2013

Payday loans have received a lot of negative press, some would say for good reason. In the past they have been known for overly-aggressive methods to obtain repayments, unclear explanations about how the loans and repayments work, and exorbitant interest rates. All of these things are not sufficient to prevent many from still trying to get these loans. The good news is that the recent attention being paid to the industry has resulted in positive changes, but that also means that more people may be inclined to use payday loans.

Payday loans definitely fulfil a need, but the ease with which a person can obtain a loan could prevent a person from checking alternatives. Time is precious and many of us have very little to spare. Payday loans are faster than trying to achieve bank loans, even though the interest is significantly lower. Many people also may not think of finding out if they qualify for help from the Social Fund, or may slip through the cracks. Since the interest rates for payday loans are still extremely high, it’s wise to check alternatives if you do have any time to spare. It’s possible that even taking a cash advance from your credit card will cost you less in the long run.

If you find that it is inevitable for you to obtain payday loans, follow a few tips so that the costs do not spiral out of control. Take the smallest possible, or the smallest amount you need. Try to make due with less, rather than taking out extra “just in case”. Make repayments on time, and try to pay more than the minimum amount required so you won’t spend as much in interest. Check with companies you owe to see if due dates can be changed or if it would cost less to suffer with a few late fees before getting loans.