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Practical tips to help you improve your credit rating and avoid expensive high interest loans

Do Payday Advances Contribute Towards Personal Bankruptcy Rates?

With the current economic climate, personal debt has never been higher. Whilst few people enjoy taking out a loan, the truth of the matter is that when times are hard and we need a little extra cash, turning to a financial institution to borrow some money is often the only realistic option.

However, if you are faced with mounting debt and decreasing credit rating can make borrowing money more difficult that you would image. That is until a number of UK lenders begun to tap into this lucrative gap in the sector by offering up one of the most controversial loans ever to hit the UK financial market. These loans are known as payday loans.

What Are Payday Loans?

Payday loans also known payday advances are essentially short term funding solutions which are available quickly and with the minimum amount of form filling in and fuss.

Whilst one of their main selling points is the fact that the application process is designed to be quick and easy, cutting through the red tape, the ease in obtaining these loans should not cloud the fact that they are a hugely expensive option.

Very Expensive Option

No matter how they are portrayed in the adverts, if you are considering this option, you should be under no illusion, payday loans are extremely expensive!

No matter how appealing they may seem and how desperate you are for extra cash, taking out any loan which may result in you repayments totalling several times the amount that you borrowed can never be a sensible idea.

Payday lending is addictive and it is all too easy to see yourself gradually starting to over depend on them.  An increased dependence on these loans can quickly see a bad financial situation become far worse and as this happens the threat on bankruptcy can loom large on the horizon.

For an in-depth look at this type of finance, please check out the following video:

Exploring Alternatives

Regardless of how bleak your financial outlook may appear, it is essential that you explore every possible option before even considering submitting a payday advance application.

With enterprising lenders entering the market all of the time, there are a variety of new options which are available to almost anyone, springing up on an almost daily basis. By doing a bit of homework and making sure that you do not accept the first available option, there is a very good chance that you can avoid being sucked towards bankruptcy and all that it entails.

The good news is that personal insolvencies are at their lowest rate for 10 years. For more on this story, please check out the following BBC article – http://www.bbc.com/news/business-31036267

 

Jon Edward
Jon Edward
Passionate about helping people find options, when on first glance there do not appear to be any.

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