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Payday Loans Shown To Be Cheaper In Some Situations Than Banks
Payday Loans Shown To Be Cheaper In Some Situations Than Banks
According to a leading UK newspaper some UK payday loans can work out cheaper in some situations that can occur to any ordinary person with their bank.
Victoria,
London,
United Kingdom
(prbd.net)
16/12/2010
A top newspaper in the UK's investigation of this matter has revealed that charges and interest drawn after taking out an unauthorised overdraft from your bank could add up to the equivalent APR of 46 million percent, making it more expensive than payday loans ( http://www.cashchoiceuk.co.uk ).
The worst offender for overcharging the customers was Lloyds TSB. It is 41% taxpayer-owned and was imposing on their customers 85.95 pounds over ten days on unauthorised overdrafts of 200 pounds. This is higher than even some of the higher payday loan charges which may go up around 30%, therefore 60 pounds on 200 pounds.
Payday loan companies are controversial and attract a lot of negative comments in the press for their exorbitant fees they charge their customers. On average they typically charge about 25 pounds in order to borrow 100 pounds, which of course varies from lender to lender.
In response to the media regarding their unauthorised overdrafts charges, Lloyds, TSB, stated: “We offer many services to our customers to help them protect against high fees and charges. We offer them texts that alert them when an overdraft is about to happen.”
The Office of Fair Trading asks payday loan businesses to state the annual costs of borrowing to any potential customer whereas banks do not have to show this as a result of being overdrawn. 70% of payday loan customers pay back the money lent within the first month which means that the charge is straightforward and actually does not relate directly to an annual percentage rate.
So even though these companies have had some negative media coverage, the investigation shows that borrowing from them can be less than some banks when taking out an unauthorised overdraft. When customers take out unauthorised overdrafts it normally means that they are unaware of their balance or need the cash very urgently, much in the same way as customers who avail of payday advances.
Consumer Focus said the services provided by the payday loan companies should be coming from a bank. 'We do not want to see them done away with. We need banks to provide alternative short-term credit for consumers who need cash.'
It seems that even though the fees you can be high, in terms of getting immediate cash it can be a reasonable solution. Certainly it has been proven to be cheaper than the nearest equivalent many banks have to offer-an unauthorised overdraft. Used as a way to prevent issues with financial commitments or unexpected cash needs, it has been proven that payday loans offer a valuable service to their customers.
Cash Choice is pleased to provide customers payday loans ( http://www.cashchoiceuk.co.uk ) when needed to handle their short-term cash-flow needs. They pride themselves on a quick and easy loan approval process.
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Cash Choice is a business set up to help you with any financial emergency by offering you a cash advance. We realise that as organised as a person might be, there are situations that can take you by surprise.
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