Payday loans have become a lot more popular in the United Kingdom in recent years. Where even a couple of decades ago this type of lending tended to be uncommon, it has since become a fixture of the consumer oriented financial industry.
As this content makes clear, however, there are often better options to make use of for those who are facing financial difficulties. While a payday loan might seem like the right solution to an unexpected problem, it will often make more sense to look into an installment loan with less onerous terms, instead.
Payday Loans Regularly Turn Out to Be Too Restrictive and Expensive
Many people who find themselves contemplating a payday loan will have gone years beforehand without facing any financial troubles. That can make it seem as if the exceptionally short repayment period typical of such loans will make for a good fit with the unaccustomed nature of the occasion.
In practice, however, this belief often ends up being mistaken. While it can feel as if being forced to repay a personal loan within the space of a few weeks or a month might be the most prudent condition to accept, this can easily become a source of trouble.
Should any kind of miscalculation be made or unexpected financial pressure of a further kind arise, it could easily become difficult to repay the loan as agreed. When that happens, extremely high penalties and fees will often be imposed, with some lenders even encouraging borrowers to take out a new loan to come back into good standing.
Installment Loans Can Be a Much Better Fit for the Average Borrower’s Needs
Problems like these can sometimes be avoided entirely simply by starting with a loan that is issued with a more generous repayment period. By spreading the repayment out over months instead of weeks, a responsible borrower can become a lot more likely to be able to keep up with the related obligations.
Loans like these also often carry significantly lower effective interest rates and fees than those where repayment is mandated over a much shorter term. As a result, they can end up being much easier for many borrowers to work with and service, particularly if any further kinds of financial troubles should arise.