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Payday Lenders Vs Brokers - Which One To Choose?
By Jack Selcit
It is not uncommon for many of us to find ourselves short of cash in the period just before pay day. You may have an unexpected bill to pay or an emergency that requires quick access to cash. There are various options available to help you out in that gap until pay day. One of the most common and easy to access methods are payday loans offered by payday lenders. Payday loans are short term, one off loans specifically for small amounts to cover that shortfall until your next wages are due. You can usually borrow amounts from as little as £100 but not much more than £1000 in a one off transaction. The premise of this type of borrowing is that you are expected to pay it off in full when you have received your salary again.
The nature of payday loans means that interest rates are normally much higher than for any other type of borrowing, typically in the region of 2000% APR, or even higher. Therefore it is imperative that you are sure you can pay off a loan like this within the agreed time frame in order to avoid these high interest charges. If you are considering taking out a payday loan you must familiarise yourself with all the terms and conditions, especially the repayment schedule and any fees or charges you might incur for late payment. Payday lenders are regulated by the Office of Fair Trading (OFT) so you can be assured that they must adhere to some strict lending guidelines and this can give you some peace of mind before committing to a payday loan.
You might be tempted to use a broker to find the best payday loan for you. You may be inclined to trust a broker to ensure you are getting the best value for your money but brokers are essentially just middle men who will push your borrowing costs up by charging a fee for their service. All a broker will do is sell your loan application on to direct lenders and this is something that you can easily achieve yourself. If you use a broker you will not have any control over who your loan provider is. It is recommended that you research and compare direct lenders yourself and make the loan application directly yourself. Using a broker will not offer any added protection, as a payday lender is subject to OFT rules regardless of whether you deal with them directly or through a broker.
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