The laws pertaining to payday loans in the UK have changed to benefit and protect consumers in recent years. The regulations now stipulate that no borrower taking out a payday loan will pay more than twice the total amount of the loan to clear the debt. However, this does not mean you can be lax about making regular loan repayments. On the contrary, if you make timely payments on your payday loan, it will save you money.
How do timely payments help?
The penalties for late payment are less than in the past, however, late payments should be avoided at all cost because timely repayments avoids any extra fees. Overdraft charges, even though they are now capped due to the new regulations, can add up quickly. The late fees can be applied to your payday loan repeatedly. Overdraft fees for payday loans are lower than the fees charged by banks, but they can still be expensive.
Be a prudent payday loan borrower
The Financial Conduct Authority (FCA) states that many payday loan borrowers tend to take out consecutive loans. If you are such a borrower, change your borrowing habit, as this is a dangerous practice. You may fall into a debt trap, with compound interest building steadily and large overdraft fees adding to the amount owed.
Be a smart borrower by taking out a payday loan you can afford to pay back on time. During the course of the loan, you also have to budget your finances smartly. Create a budget that helps you clear your payday loan in the agreed time because this will save you money.
If you need a payday loan, find a payday lender that offers you terms and conditions with which you are comfortable. The best way to do this is to use the allthelenders website, which is the UK’s first payday loan comparison website. It is authorised and regulated by the FCA, and is completely independent and impartial.