No doubt, same day loans have enjoyed immense popularity in the UK if statistics are anything to go by. In the past four years alone, the number of individuals in the UK applying for same day loans has quadrupled. This in itself is an indication that same day loans are here to stay and their popularity won’t wane any time soon. The allure of quick cash, convenient online application, simple paperwork coupled with the fact that no collateral is required has made same day loans quite popular since the credit crunch. However, in as much as it’s a quick fix whenever a person urgently needs money, it’s not lost on us that these short term loans are also a big fix.
With the skyrocketing interest rates, a person might find himself in a debt rut and a worsening credit rating as days go by. Essentially, same day loans are short term loans that are basically approved within the same day and repaid usually on the next payday. The repayment period for a same day loan is usually between 7 and 30 days though a person might renew them if they so deem fit. The popularity of same day loans is hinged on the fact that no collateral is required, purpose of loan is not required and individuals can get access to the cash they need within a couple of hours.
The major disadvantage about same day loans and which turns away many people has to do with the high cost of the loan. In essence, same day loans are a risk to the lender and not to the borrower. In the absence of security, lenders advance money with the hope that the borrower will repay it back. In that regard, they tend to set a high interest rate as a way of cushioning themselves in case the borrower is unable to repay the loan. Some lenders even charge APR on same day loans in the region of 4000% making same day loans highly expensive. It is perhaps for this reason that UK citizens are advised to only go for same day loans as a measure of last resort.
Of course, the number one risk of same day loans has to be the aspect of credit score worsening in a situation whereby a person cannot repay the loan. There is also the risk of the loan ballooning to high figures when penalties and default fees are factored in. add to that the fact that you could also be sued if you fail to meet your end part of the bargain and you will understand the need to apply for what you just need. Lack of peace of mind, deductions from your bank account are some of the ugly aspects of taking out a same day loan and failing to repay over a period of time.
In a nutshell, while same day loans are a quick fix, the risks could fundamentally cripple a person financially. It is therefore important to approach them with caution at all times!