Payday loans can be extremely beneficial if you know how to use them and you have the ability to plan your finances wisely. However, a payday loan can also turn into a debt trap if you are not careful with your money.
Keeping up with the Joneses
You see celebrities amassing millions in back taxes and debt, and the worst part is these celebrities continue with their lavish lifestyle even after getting out of the mess. They may feel a compulsion to keep up with their friends and neighbours to show they too are making enough money.
Regular people can also fall into this cycle of spending more than they can afford. You may take a loan to buy luxury items and then realise you cannot afford to repay the loan. Then you fall into the vicious cycle of taking out another payday loan to clear your previous loan. You end up paying more than you would have if you had bought the items with your own money.
Using payday loans smartly
All payday lenders in the UK will give you an advisory not to use the loan for month-to-month survival. If you are using payday loans to get by each month and pay your monthly bills, you are not using payday loans correctly.
A payday loan is meant to provide quick cash to cover emergency bills or repairs and unexpected expenses. You can also use the loan to clear your overdraft and avoid late fees. It can help you keep your account balance positive if you know there is a direct payment due but there is insufficient cash in your current account.
Only when you use payday loans properly will you be able to ensure your financial wellbeing. Before taking out a payday loan, compare different lenders and get the best rate. Allthelenders is the UK’s first payday loan price comparison website. It is authorised by the FCA, and ensures impartial and independent comparison results.