A payday loan is a short term loan that is designed to keep you going until your payday. Some payday loan companies will let you choose the repayment period, rather than restricting it to when you get your salary.
The loan itself is usually paid straight to your bank account, often within a day of your application. The repayment with interest is then taken from your basnk account on the due date. Charges are typically around £25 oer £100 borrowed and interested rates advertised are often around a huge 1,750%.
Payday loans have had a lot of press of late and many people have struggled financially after having taken them.
If you are having difficulty paying back your payday loan, you should get in contact with your lender as soon as possible. This should help you minimise any penalty charges and running up more debt. Lenders are obliged under OFT (Office of Fair Trading) rules to help you.
The OFT’s Irresponsible Lending Guidance requires lenders to treat borrowers in financial difficulty fairly and with forbearance, which means they should work with you to come up with a plan to repay your debt over a reasonable timescale.
We have found a useful video from the Citizen’s Advice Bureau about Payday Loans
A Logbook loan is a loan that is secured on your vehicle, so the company that lent you the money, owns your vehicle until such time as you pay back the loan. These loans tend to be expensive and risky and the general advice from the government agencies is that it should be avoided wherever possible. Click Here to see what the Money Advice Service says about this type of loan.