If you’re having troubles with managing your income month after month, payday loans are not the answer. They are usually an expensive way to borrow because of the amount of interest that you’ll repay with your debt.
Payday loans are short-term loans with high-interest rates. Usually, people utilize payday loans for small purchases that are often between £50 and £1,000. This is designated to be taken out for a few weeks.
If you cannot afford to pay your payday loan, it can spiral out of control. The high-interest fees and charges can make it unaffordable if you keep ignoring it. If you’re thinking to take out a payday loan, you might need to scrutinize your finances and explore other alternatives.
Moreover, you should not take out a payday loan to pay your debt. A payday loan is not a debt solution, it can make your situation even worse.
Help with the Financial Effect of COVID-19
There are several measures taken into account to assist people who are financially struggling due to COVID-19 pandemic. These include payment break on mortgage and payment holidays for particular types of credit. Overdraft charges are also modified. Help for those who are renting is also available as well as the extension of the moratorium period for those living in Scotland.
For further details, you can check the following guide:
- Financial Help Available During the Coronavirus Pandemic
- Dealing with Energy Bills during the COVID-19 Crisis
- COVID-19, Debts and Your Mental Health
- Emergency Help with Food and Money
- The Different Debt Management Solutions
Should I consider payday loans?
The answer to your question depends on your circumstances. However, a payday loan is not an ideal way of borrowing most of the time. You have to consider the following before taking out a payday loan:
- What is the payday loan for?
- Are there other alternatives to payday loans?
- Can I afford to repay a payday loan?
FAQs on Payday Loans
Can I go to prison if I don’t repay a payday loan?
It’s rare that you can go to jail for payday loan debt. The same goes for other types of consumer credit debts.
There are debts though where you can be sent t prison for non-payment. These are usually common in criminal offences. If you reside in England, non-payment of council tax arrears can lead to imprisonment but it’s rare in practice.
What can happen if I can’t pay my payday loans?
If you cannot repay your payday loan debt, you’ll owe the outstanding balance, interest fees and charges which can sum up to an unaffordable amount.
Your lender must conduct a check if you can afford to pay the loan before approving your application. Besides, if you believe this hasn’t been done, you can file for a complaint. Once you do, this can possibly write off the interest charges and reduced the debt.
If you failed to pay, your lender might forward your debt to a debt collection agency. You can check our guide on: Understanding the Debt Collection Process
If you’re worried about your payday loan debt, do not hesitate to contact us.
Can my lender take me to court for payday loan debt?